Why Is This System So Broken? A Wells Fargo #Fail

I know there is no shortage of Realtors out there who are talking, blogging, yelling about some experience where their client has been wronged by the government or some big bank. And as inclined as I would normally be to avoid such a saturated topic, I truly believe these stories need to be out so the general public can hear them.

Recently, one of my very best clients came to me to discuss options for one of her properties. In 2007, she had purchased this home and shortly thereafter, as her situation changed, she needed to leave it. Determined to do “the right thing”, we sat down and discussed the possibility of the home as a rental. She ultimately decided to rent the home at a significant loss each month so she could either wait out the market or see what the future held for her. That was a year and a half ago.

Grossly under water on her negative cash flow rental and after almost 18 months of doing “the right thing” something had to give. Finances would no longer allow her to carry the rental at a loss and it was time to look at the property as a potential short sale. Again, we sat down and discussed the options- Short Sale, Deed in Lieu or Foreclosure. And once again, prepared for the uphill battle associated with “the right thing”, we listed the home as a short sale.

This client is a Short Sale listing agents dream- meticulously organized, logical, intelligent and motivated, she wanted to get out from under this property and was prepared to do what she needed in order to make it happen. We had genuine hardship, and could show that rental values did not come close to covering the mortgage even with zero vacancy.

The property was purchased for $217k in 2007- no refinances, just plain old purchase money. The bank, Wells Fargo- A company who (in theory) should be at the forefront of the initiatives to help struggling homeowners. A look at pricing puts this home somewhere in the low to mid $90’s given the array of terms and conditions associated with a Short Sale.

We list at $99k and wait… and wait… and wait some more. Finally, Bam- Offer time! We receive an offer at $89k from a well qualified Buyer, owner occupied, motivated, all the good stuff. About this same time, I see the same floor plan in the same subdivision, with similar amenities close escrow at $87k! This is too good to be true I’m thinking- I’m gonna slam dunk this thing and make my client’s day (or year)!

The offer, along with a novel of documentation gets submitted, reviewed, and is found to be complete, so now we wait… and wait… and wait some more. Finally, I hear back:

Response from Wells: “I am working on the above referenced file and we have received the value back from the investor.  The offer presented is too low.  The offer you sent in nets $81,906 and the investor is requiring a net of $106,480. Please communicate with the buyer and get back to me within 48 hours.”

What?!? Are they serious? Are they looking at the same house I am?

I go back to the Buyer, present the info and get them up to $91k. I also put together a letter of explanation, complete with comparable information and stats from MLS making THIS deal right, and resubmit.

Response from Wells: “Thank you for the new documentation. The offer presented however, will not meet the net required by our investor. At this point, I will pass the file to negotiations for review to see if they can proceed. Thank you.”

Ok- Surely the negotiations department will be able to, well negotiate.

Response from Wells NEGOTIATOR: “Your offer submitted was reviewed and rejected by the Investor.  As you were informed by the Processor, the Investor requires an offer which will net at least $106,300.  Please be advised the Investor has instructed us to remove this file from Short Sale.”

Ugh! Dejected, disappointed, confused and just plain pissed, I return to all parties and kill the whole thing. Dead! Seller, still (bless her heart) offers a deed in lieu which Wells Fargo graciously accepts, taking the property back to add to their impressive portfolio.

Here’s where it breaks- A few days ago when my trusty MLS search popped up showing that the property has been listed, this time as a Lender Owned home:

List price- $97,900 WITH 3.5% closing cost assistance and a $1,500 bonus for the Selling agent. Net contract price (assuming full price) is $92,900. With a few basic assumptions and facts on the cost associated with the process to get the property to this point, commissions, upkeep and the such; I think that we can assume that this property will now net considerably less than the offer I had to kill just 2 short months ago.

Wells Fargo, I suppose I should thank you for the story- unfortunately, it’s another in a long line those ending in a fail for someone trying to do “the right thing”.