|
Cover letter to U.S. Senator Dodd Chairman, Committee on Banking, Housing and Urban Affairs |
September 30, 2007
Scott Webster
Jean Allen Webster
204 Charlotte Drive
Dugspur, VA 24325
The Honorable Christopher Dodd
Chairman, Committee on Banking, Housing and Urban Affairs
534 Dirksen Senate Office Bldg.
Washington, DC 20510
Dear Senator Dodd:
We never believed that at this point in our lives when we should be
enjoying retirement or at least semi-retirement, that we would find
ourselves caught up in such a fiasco as this current mortgage market
scandal. Between us we have 80+ years of good credit that we had
worked hard at maintaining by always paying our bills on time, we
have paid off three mortgages and past credit cards. Before we got
sucked into this financial mire we had an excellent credit score of
769. That was in 2005, today, two years later, our credit rating is
approaching a negative. Our default on the mortgage naturally
showed up on our credit report, the credit card companies jumped on
the bandwagon and started increasing our rates until they reached
29% to 32%. The result was our total minimum monthly credit card
payments exceeded our total monthly income (Scott receives social
security and Jean works part-time.) And of course, the foreclosure
hangs over our heads which is the primary reason we are writing this
letter.
If one listens to the media pundits one is led to believe this
scandal centers around the first time homebuyer who really couldn't
afford to buy a house but was lured in by the sub-prime mortgage
companies offers of initial low rates through ARMs. What we aren't
hearing enough about is the deceptive, fraudulent and predatory
actions of the major lending institutions such as Wells Fargo Bank,
N.A. and how it has affected people in the refinancing market.
What started out as a plan to free ourselves of debt and to live
mortgage free turned into a financial nightmare. Our original
objective was to sell our property in NY in which we had a lot of
equity, buy a house with some land that could be used to create
income and to pay off our credit cards. We initially sought a
bridge loan but after a few lenders (also at major banks) said we
should draw on the equity in our property, we agreed that was the
way to go. After all, these were the professionals, shouldn't they
know the best way to achieve our goal? And we had successfully been
through several previous refinances, so what could go wrong.
Well, we are today totally flabbergasted at the charade perpetrated
by the agents, representatives and/or employees of Wells Fargo Bank,
N.A. Their actions are reflective of a corporation that has no
ethics and who evidently believe any thing that can be done to
improve that "bottom line" and their own personal wealth is
justifiable and it doesn't matter who gets run over in the process.
This includes predatory lending, decipt, fraud and slander.
The attached chronological statement of events summarizes how a
series of unfortunate events can snowball into an unbelievable
financial nightmare.
Wells Fargo Bank, N.A.:
- led us to believe drawing on the equity in our home was the
best way to achieve our goal of purchasing a new home in VA
while selling the home in NY and that our good credit would
enable us to refinance for $650,000 in a couple of weeks.
They readily gave us the pre-approvel letter we requested.
Based on this assurance we signed the purchaser's contract for the
property in VA with closing scheduled in 45 days. (see Par. 2 & 3);
- waited three weeks to tell us we were turned down for that
particular plan, but wait, we can refinance for $522,200 and
then apply for $150,000 equity credit loan which turned out to be
an interest only loan with an adjustable rate besides.(see Par 4,
5,6 and 13)
- delayed further with complications raised by the underwriter
over the carriage house roof (an outbuilding!) (see Par. 7)
- sent us a commitment letter that said the loan type was a 2/6 ARM,
FIRST MORTGAGE LOAN and the loan amount was $522,200 and at
closing one of the conditions to be met was "Payoff all liens
of record against subject property". (see Par. 8);
- at closing, presented us with a mortgage for $380,346.31
and we were then told this mortgage was being "consolidated"
with the existing mortgage to create $522,200 even though the
HUD-1 Settlement Statement said the existing mortgage was to
be paid off. (see Par.9)
- sent us a letter and certificate stating that the necessary
funds had been received to pay off the pre-existing mortgage
(balance of $143,409.56 on $162,000 mortgage) and that they
would mail the SATISFACTION documents. (see Par.12 and 96);
- misled us into thinking they were going to work with us
when we defaulted by inviting us to present a hardship letter
to their loss mitigation department (see Par. 54, 55 and 56);
- deliberately filed the lawsuit 10 days before Christmas, 2006
and served the Summons and Complaint on December 20th.
(see Par. 57 and 58). In our response to the Complaint we
challenged this timing, their comeback was that after 120
days of non-payment by us, they had a right to sue. We
never challenged their right, we challenged their timing.
Would waiting two weeks until after the holidays were over
have made such a difference? If we had to hire a lawyer
that difference in time could have been critical.
- used the date of the original $162,000 (August, 1995) to try
to claim laches even though a number of documents, including
the "consolidation agreement" state that there is but one
lien and mortgage and that supercedes any preceding ones.
They wrongly state that we entered into the $162,000 mortgage
in 1995 with MERS as a nominee for Wells Fargo. Evidently,
this misstatement was supposed to support their claim of
laches. (see Par. 61 through 66);
- submitted affidavits that were defamatory to our character
and of our intentions in an effort to mislead the judge.
(Par. 67, 70 through 75) There was no need for them to do this,
after all, we admitted default. The only reason to slander us
was to distract the judge from their wrongdoings.
- had us sign a consolidated agreement in May, 2005
claiming to be consolidating the original $162,000 (1995)
with the $380,346.31 (May, 2005) to supposedly create a
$522,200 mortgage. We find out in the court papers (2007)
that Wells Fargo did not actually have the "assignment"
turned over to them from MERS until December 1, 2006 when
they were preparing to foreclose.(Par. 68).
According to all the paperwork preliminary to closing on May 16, 2005
it is apparent that we applied for and were granted a loan for
$522,200, that we were refinancing and all prior loans would be paid
and satisfied. Since the foreclosure actions began we discovered
that according to Wells Fargo, the original loan from 1995 for
$162,000 was "paid off" but not "satisfied"; this same loan was sold
to MERS in 2001 as "nominee for Wells Fargo" to whom we had been
making payments since 2001, and now in 2007 we find out that
Wells Fargo didn't even physically have the assignment on this loan
until December, 2006 (see Par.68). So, Wells Fargo took a loan that
was at a fixed rate of 7.25% and by "consolidating" it actually
converted this loan to a higher rate because the so-called
"consolidated" loan was an ARM with the initial low rate of 6.25%
but in two years it would increase to over 8% (an amount higher than
the original fixed rate) and of course it would increase more.
PREDATORY LENDING.
What about the Wells Fargo broker, how did she get paid? Was her
fee based on the $522,200? If so, that is wrong. All she really got
for us was the $380,346.31 and the $150,000 equity credit loan.
Ever since the foreclosure action, we have been trying to
come up with a reason as to how Wells Fargo could justify creating
this financial sham. When we recently contacted the settlement
agent, he tried to tell us Wells Fargo creatd a consolidated
mortgage so we wouldn't have to pay mortgage tax on the whole amount
(see Par. 91 through 93). Now that's the biggest red herring yet.
Wells Fargo is going to save us several hundred dollars but we would
be paying thousands of dollars more because they converted our pre-
existing mortgage from a fixed rate of 7.25% to an ARM the would go
up to over 8% in two years and even higher two years later.
PREDATORY LENDING.
In the same letter, he also stated that the $522,200 mortgage that
we signed, initialed and dated was not a "mortgage" but an "exhibit
of a mortgage" (see Par. 94).
The $522,200 refinancing that we applied for was, in the parlance of
the mortgage industry a "jumbo" loan because it was over $417,000.
According to what we have recently read about these loans is that
they can't be packaged into securities sold to investors by
government sponsored housing finance agencies, Fannie Mae, Freddie
Mac. This reason is more logical as to why Wells Fargo changed the
terms at the last minute. Wells Fargo created a "consolidation"
because it would work more favorably for them and not to save us
paying mortgage taxes as Mr. Penzetta claimed. (see Par. 92)
Wells Fargo had nothing to lose by our defaulting and they knew that
when they lured us in with their "consolidated mortgage" scam. There
was enough equity in the property to make their interest worthwhile.
We believe there was actually no "consolidation", we believe there
was also no reason for Wells Fargo to finance $522,200 plus $150,000
equity loan in order for us to achieve our goal, i.e., draw on
the equity in our NY property to buy our new home in VA. We believe
the "consolidation" transaction was nothing more than "smoke and
mirrors". In the process of trying to figure out this so-called
"consolidation" we started playing with the numbers and came to the
above conclusion. We actually did not need a total of $672,000.
(See attached Financial Analysis) PREDATORY LENDING, FRAUD.
When our original application for $650,000 was rejected, our mortgage
broker said we could re-apply for $522,000 which would pay off all
pre-existing loans and give us a pay out of about $198,00 and we
could get the balance from an equity loan. We needed $299,000 to buy
the property in VA, so she suggested getting $150,000 which would
give us a cushion since we would undoubtedly be incurring unexpected
moving costs, etc. Now that $522,200 was to have paid off the balance
of the Wells Fargo loan of $162,000 as well as two HFC loans that
totalled $164,981.04. That's the way we were given to understand
that it would work. (See attached Financial Analysis)
At closing the following scenario occurred, Wells Fargo gave us a
loan for $380,346.31 with which they paid off the HFC loans, claimed
to have paid off the balance of the pre-existing Wells Fargo loan,
then took that same loan, said it was not satisfied, added it to the
$380,346.31 and now claimed they loaned us $522,200. The payout was
still about $198,000. (See attacched Financial Analysis) We had to
apply for the $150,000 line of credit to meet our need for $299,000.
We were not told that the line of credit would be tied into the
"Index Rate" nor that it was "interest only" nor that it was
subordinate to the so-called $522,200 mortgage. We were told the
loans were a "package".
The following is the way we could have and should have gotten the
financing we needed, the $299,000, to purchase the property and it
would not have cost us $672,000 in financing. The original Wells
Fargo mortgage ($162,000) with a balance of $143,409.56 should have
been left in place and we would continue payments on it. The
$380,346.31 mortgage that Wells Fargo gave us was sufficient to
payoff the total HFC loans $164,981.04, pay the closing costs,
$15,402.32 and give us a payout of $199,900. This is the same,
actually a little more payout than they gave us with the falsified
$522,200. Now since we needed $299,000 they could have given us up
to just under the $417,000 limit before it becomes a "jumbo" and
given us a much smaller equity loan that would have been more
manageable. In other words the whole transaction could easily have
been done for $500,000 and still would have given us a cushion! This
scenario would have saved us $172,000 in new (very expensive)
financing. (See attached Financial Analysis) This analysis also
supports our charge that there was no "consolidation" because they
were actually able to give us the cash out they originally said
they would, $198,000+/- from the $380,346.31 and then they converted
the pre-existing $162,000 to the higher rate ARM.
Better yet, they could have left all existing mortgages intact and
simply given us a loan for $299,000 which was all we really needed
and had asked for. In that scenario, our total indebtedness would
still be less than it is today.
FRAUD, DECEIPT, PREDATORY LENDING!
Other questions that we are raising involve Wells Fargo and MERS.
MERS "as a nominee for Wells Fargo" held the assignment on the
$162,000 loan from Sept. 2001 until December 1, 2006. Yet in May
2005, Wells Fargo "pays off" and alledgedly "consolidates" this
loan. Did Wells Fargo actually have possession of this loan in 2005?
If they did, why was it necessary to get an assignment from MERS in
December 2006 immediately prior to foreclosure actions? If this loan
was paid as claimed by Wells Fargo, how can they say it was not
satisfied and start the clock ticking on it again? How can they
take an earlier loan, combine it to with a loan with a later date,
state that the later dated loan supercedes the earlier date and then
turn around and sue us on the earlier date so they can invoke
laches?
MERS should also be investigated by Congress.
In 2001 or 2002, Wells Fargo CEO, Richard Kovacevich gave a lecture
at Texas A&M as part of the annual Wells Fargo Program on Ethics (HAH!).
In this lecture he addressed the issue that corporate executives are
stewards of corporation funds and must exercise their stewardship
with "honesty, trust and integrity" based on "sound financial
principles" and not on "what they can and cannot get away with".
It's too bad he didn't give this lecture to his employees. He also
stated that "Management must be held accountable for a company's
decisions". WE HOLD MR. KOVACEVICH ACCOUNTABLE. Mr. Kovacevich
further stated:
"Remember, corporations have no conscience, but people do.
That makes corporate ethics the sum of the ethical decisions
made by individuals every day. Since we all benefit from
the free enterprise system, we must all pull together to
fix it."
We challenge Mr. Kovacevich to fix it.
As soon as Wells Fargo filed the foreclosure paperwork in December
2006, it was only a matter of a couple of weeks before the
"foreclosure" websites picked it up as "pending". Guess what they
quoted as the outstanding mortgage, the $162,000. This was brought
to our attention by an acquaintance and she was the first to tell
us that the $162,000 was still showing on the county records as a
active mortgage and that no, it did not show as "satisfied". That
was the point at which we started investigating what had occurred
from the time we had applied for a refinancing mortgage to the day
we closed.
Shortly after we appeared as a "pending foreclosure" on the websites
someone called about the house, he was looking in the area, etc.
When we talked to him, he revealed that he saw our house on one of
the websites and would be interested in making an "offer that we
could live with". When Scott revealed to him the amount that was
actually outstanding on the house, we never heard from him again.
We complained to foreclosures.com and demanded they either withdraw
the entry or correct it to the proper amount. We would not be able
to sell a house that originally listed at $869,000 when people are
misled into thinking we only owed $162,000. Of course, we never
heard back from foreclosures.com. Another company that's not
interested in accountability.
The second legitimate buyers we had for the house were told by their
lawyer after he did a title search that our situation was "difficult".
(see Par. 84)
So having a foreclosure hanging over a house does not help to sell
a house, it may as well be a death sentence as to obtaining a
fair and reasonable offer.
There has been much talk about government bailout for the people
caught up in this mortgage scandal as well as talk about clamping
down on giving mortgages to people who can't afford them and making
sure people can document their income. We also hear how some
mortgage companies have gone out of business, others laying off
employees and basically how seriously the industry is hurting. Too
bad! They brought it on themselves using predatory tactics to scam
people for money they don't have. What we would like to hear is how
is the government punishing these financial institutions for their
predatory and fraudulent actions. As far as we are concerned, there
should be people going to jail for these actions. And, you can start with
Wells Fargo. How many people have been affected as we have with
Wells Fargo's "shell game"? Hundreds, thousands? How much of their
profits have been made at the expense of scamming the "little guy"?
Hopefully, we will start seeing these major financial institutions
being held accountable for their fraudulent actions. They are
nothing but a bunch of "white collar" thieves.
How have these institutions remained unaccountable? How did this
government with all their committees and sub-committees, regulatory
agencies, etc. permit these lending institutions to have such a free
hand and permit a situation so dangerous to the economical welfare
of this nation to go on for so long and get so out of control?
Congress must also be accountable.
We have heard a number of media pundits blame the situation solely
on the people who bought a house they couldn't afford, we have heard
those people referred to as "greedy". That is really unfair because
the truth of the matter is that most of these people probably could
afford a house with a traditional mortgage with a low interest rate
but instead they were suckered in to these ARM's. Mr. Greenspan, in
all his wisdom, kept increasing the prime rate every quarter for
quite some time. What did everyone think was going to happen? The
results of the predatory actions of these financial institutions is
going to trickle down through the economic food chain and could
result in a recession. And who will get hurt most then? The same
people, the eternally struggling middle class.
Perhaps we should thank Wells Fargo for foreclosing on our house.
After all if they hadn't we still would be unaware of the fraud
they perpetrated on us.
We thank you for your patience and time in reading our lengthy
letter and the accompanying chronological account of our situation
and the financial analysis. It has been very difficult to explain
our situation succintly as it has been compounded by incompetent yet
greedy real estate brokers, a disreputable home inspector, and
dishonest lawyers conspiring to pick up our property at foreclosure
denying us any chance of selling at fair market value.
We look forward to your input as well as input from any and all
whom we have copied, especially Richard Kovacevich, CEO, Wells
Fargo.
Sincerely,
Jean Allen Webster
Scott E. Webster
att.
cc: Richard M. Kovacevich, CEO Comptroller of the Currency
420 Montgomery St. Compliance Management
San Francisco, CA 94104 250 E Street SW
Mail Stop 3-9
The Honorable Chuck Schumer Washington DC 20219
534 Dirksen Senate Office Bldg.
Washington, DC 20510 Steven J. Baum, PC
220 Northpointe Pkwy, Ste. G
The Honorable Hilary Rodham Clinton Amherst NY 14228
534 Dirksen Senate Office Bldg.
Washington, DC 20510 HUD
Office of Inspector General
R.K. Arnold, President & CEO Hotline, GFI
MERSCORP Inc. 451 7th Street SW
1595 Spring Hill Road, Ste. 310 Washington DC 20410
Vienna VA 22182
The Honorable Jose Serrano
Chairman, Appropriations Subcommittee
Financial Services & General Government
Room 1040A, Longworth House Office Bldg.
Washington DC 20515
Ben Bernanke HUD
Federal Reserve Chairman Office of RESPA
20th St. & Constitution Ave. NW 451 7th St. SW
Washington DC 20551 Washington DC 20410
The Federal Reserve Board
Division of Consumer & Community Affairs
20th St. & Constitution Ave.
Mail Stop 801
Washington DC 20551
Federal Trade Commission OCC
Bureau of Consumer Protection & Customer Assistance Group
Business Education 1301 McKinney St, Ste. 3450
600 Pennsylvania Ave. NW Houston TX 77010
NJ-2267
Washington DC 20580
more to be added