We recently refinanced our mortgage. We changed from a 20-year to a 30-year loan, and reduced the rate by one percent. Along the way we talked to three different mortgage brokers as well as our mortgage holder, Wells Fargo. Wells Fargo was the worst of the lot. They couldn’t even come close to the rates I was getting offered in other places. I found this odd, since they knew better than anyone what a good credit risk we were.
We just got a letter from our new lender. They have sold our loan. Guess who they sold it to? Wells Fargo of course.
I don’t understand the Wells Fargo decision making. They had a good customer in me. They sent me mailings every month urging me to refinance. When I did talk to them, they had horrible terms. But they were willing to buy my loan from someone else. I imagine they had to pay some upfront money to do so. The new loan is on terms much less favorable terms to them, and it’s the exact same customer as they already had.
Something’s crazy here.
Ole, that bit about low level people and foreclosures is exactly the autopilot I was talking about 😉
Being a former line manager at Wells (not in mortgage though but know enough about mortgages), the mortgage business has minimal “judgement” involved as most everything is process oriented from application to underwriting to closing. That’s because most loans are securitized and sold off to investors. Wells Fargo probably didn’t buy your loan, they are probably “servicing” it meaning they get a fee for collecting payments, etc.
The mortgage consultant (salesperson) has some minimal authority on fees/pricing, but very little. My mortgage was from Wells at my old house, and they gave me a lower rate because of the deposit balance I had with them.
i agree with most of moleboy’s comments. only one i slightly differ is that it’s not necessarily the autopilot that fed the crisis…actually, i think automation and process makes things more efficient, but it’s the underwriting criteria, and new aggressive products (that assumed valuation would keep going up).
the problem with foreclosure is the banks don’t want to do it, but the low level people who handle late payments have a strict process they need to go through and have no discretion. it’s taken too long for executives to put in new, more discretionary and reasonable ways to handle problems. i think they are starting to get it and put in better processes in place. big 100,000 employee companies take long time to make decisions and change courses.
your situation isn’t unusual at all…banks alter pricing to dictate originations. few of the large banks want to underwrite new mortgages aggressively. plus, your 580 fico score may have something to do with it too muttrox! Just kidding.
And people wonder why there’s a financial crisis going on???
left hand not knowing what the right hand is doing, I would assume.
I’m assuming that banks are running on autopilot. If A then B, regardless of whether or not B is in anyone’s best interests. And, of course, different divisions have different As and Bs.
This autopilot, I believe, has fed the crisis.
I simply can’t understna why a bank would rather foreclose on a property with dropping value than allow the person in trouble to refi.