Wells Fargo News 06/16/2011: Wells Fargo Closes Reverse Mortgage Lending »
Also See “Reverse Mortgage Problems”
We have a problem. My wife and I started a reverse mortgage with Wells Fargo and after almost 65 days, we still didn’t have approval. We called our agent and when he does take the call or calls us back – which is rare – he says everything is fine and we’ll be done soon. I called another company and they gave me a quote that was better than Wells Fargo Reverse Mortgage but they had to transfer some number from HUD before they could get our loan approved. I wrote a letter like they told me we had to do and my new company (not you guys) told me that they would handle it. For the next two weeks I kept getting calls from my new company telling me that they either could not get the HUD number transferred or something from the appraisal company. I called Wells Fargo’s Reverse Mortgage office and they sent me a bad copy of the appraisal on my house but my new company told me that they needed some more things from the appraiser or the company who manages him and they won’t give it to them. In the meantime, I’m finally getting daily calls from the agent I was using at Wells and he’s telling me that the other company can’t perform and I should go back to them. I don’t really want to go back, but I think I might have to just to get my loan closed. How do I know who’s telling me the truth? What do you suggest? – Paul
First a little history. When HUD implemented their Appraiser Independence Rule in 2010, it required all originators to order appraisals from Appraisal Management Companies (you can read about that here). This was done to put a similar set of rules in place as the Home Valuation Code of Conduct (HVCC) rules that went into effect earlier for conventional loans sold to investors like Fannie Mae and Freddie Mac. Most companies like ours, use an Appraisal Management Company (AMC) that is approved by the lender where they intend to take the loan, but if they choose to go to another company at a later date, lenders will take the existing appraisal (original with color pictures) as long as it is accompanied by a Certification from the AMC that the rules for Appraiser Independence have been followed.
Enter Wells Fargo. Wells Fargo Reverse Mortgage owns some or all of RELS, the AMC they use solely for appraisals. If you do an internet search, the net is full of articles of lawsuits of people suing RELS and Wells Fargo for different issues and various information cites different percentage ownership of RELS by Wells Fargo, but it seems that a minimum of 49% ownership is not in question, although I cannot confirm this number. At any rate, if you apply for a loan at Wells Fargo, they will use RELS for your appraisal as they profit from the income they receive. The added benefit for Wells Fargo Reverse Mortgage is that they can do to borrowers exactly what you are describing, and we have documented cases of that happening with our borrowers as well.
HUD issues a case number to an originator that stays with the property when an FHA loan is first started. If that originator orders an appraisal, that appraisal is also logged into the HUD system and it too stays with the property, even if the borrower wants to change lenders. HUD does this so borrowers can’t just keep changing lenders if they don’t like their appraisal and the appraisal that is logged into the HUD system stays with the property for many months. Under the HUD rules, once you notified Wells Fargo that you wanted to change lenders, and you wrote a letter authorizing the new originator to receive the existing “HUD Case Number”, Wells Fargo is required to transfer the case number. However, here’s where they thwart the borrowers’ desires. When the new originator contacts RELS to get an original appraisal which is required, RELS tells them that they work only for Wells Fargo since they did the appraisal for them and cannot give them anything. Wells Fargo tells the borrower that they have transferred the Case Number and have nothing to do with it anymore. If the borrower asks for the appraisal for which they paid, Wells Fargo meets the minimum requirements of the law by giving them a poor black and white copy of the appraisal that no lender will use for lending purposes. This goes on for as long as the borrower will allow and in the meantime, the Wells Fargo originator begins calling back offering to now finish the loan in an expeditious manner. Most borrowers finally give in and go back to Wells as they just want to get their loan closed. In fact, we are working on another loan at this very moment where we finally got everything transferred, the original appraiser left off HUD required information and we are going through this exercise. RELS tells us that they can only work with Wells Fargo, Wells Fargo tells us to call RELS. We are about to write to HUD Washington to protest this treatment of borrowers.
So while I cannot vouch for what is happening with your loan now, I can tell you that we have absolutely run into the same roadblocks. What you can do depends on your time frame. Your new originator can contact HUD and with a letter from you stating the circumstances, they may be able help. I do not believe that HUD ever intended for borrowers to be locked into one lender with the Appraiser Independence Rules. I think if this is happening to enough people and they make HUD and their Congressional Representatives and Senators aware of the problems they are having due to Wells Fargo’s and RELS’ unwillingness to work with borrowers and other lenders, and HUD does not plan to eliminate Appraiser Independence, HUD will have to act to set forth and enforce rules for AMC’s to follow if a Case Number is transferred to a new originator/lender.
Have you had a similar problem with Wells Fargo? Leave your comments below!…
“Wells Fargo Reverse Mortgage Complaints” by www.allrmc.com
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