Wells Fargo Home Mortgages — multiple appraisals to deny loan
Homeless and Working
My daughter is about to become homeless. In these troubled times, that does not make her unique; however, she is unusual because she will be homeless while both she and her husband have reasonable paying jobs and can afford a reasonable rent or mortgage. To complicate matters further, she is about to become homeless and deliver her first baby (my first grandchild) at the same time. Wells Fargo made her homeless. Wells Fargo and its mortgage branch made her homeless, though she doesn’t have and never did have a mortgage with them.
Like so many children, my daughter graduated from college, found a job in her chosen field, moved away, fell in love, married, earned a graduate degree, and became pregnant with her first child. None of those are unusual activities. They are life. Along the way she attended school full time and worked full time, commuted an hour to school and an hour to work in the opposite direction, completed an internship, and moved a couple of times. I was impressed that she accomplished all these things, but then I knew her best as a child and still have trouble picturing her as an adult. She long ago outgrew childhood.
When she became pregnant, she and Kevin began thinking about a house in which to raise a family. After discovering houses sold for 300K or more where she lived, she found it was still possible to buy a house in her old hometown for less than 200K. They could afford that, and, while they would still be commuting to work, they would still take about the same time to commute from our town, just from a new direction. Once again, for young people they seemed to make very mature preparations.
They organized a careful campaign. They investigated the $8, 000 tax credit for first-time homeowners and the deadline for closing to get the credit. They calculated their budget and what they could afford for a down payment and what they could afford for monthly payments. Although they live nearly one hundred miles away, they arranged for nearly weekly visits to our town during which they scheduled tours of several likely homes they had researched on the Internet. They asked my wife and me to visit some of these homes in advance to give them another viewpoint. They applied to Wells Fargo for pre-qualification for a loan months in advance of purchase. When they visited homes they liked, they tested the air themselves for the presence of lead paint. When they finally found the house they wanted--an older two-story with three small bedrooms but well maintained with a small fenced lot--they negotiated a price agreeable to both parties and set a closing date.
With a closing date set, they continued their weekly visits to us but now brought packed boxes to store in our house against their moving day. They broke their lease and paid a premium for that, and set a moving date a month after the closing when they would have to be out of their apartment. In the meantime, the clothing and baby furniture they accumulated from baby showers and shopping have been stored at my house so they can just move them across town when they finally live here.
Their mother and I had never again expected to have any of our children close to home. The notion of having not only our daughter and Kevin so close but our grandchild, too, is an unexpected pleasure.
Everything seemed to go well. The building inspector and the Wells Fargo appraiser both arrived the same afternoon several weeks ago. The inspector thought it was a cute little house. The first closing date came last Friday and had to be postponed because Wells Fargo wanted a copy of the inspection to demonstrate an old termite problem had left the house still structurally sound. The closing was rescheduled to the next Tuesday. On the Monday before the closing, literally hours before closing, Wells Fargo informed Beth and Kevin there would be no closing because a second appraiser had valued the home at forty thousand dollars less than the purchase price.
Obviously the seller does not want to sell a house for substantially less than he paid for it. Kevin and Beth also cannot afford to pay their agreed on price because their carefully calculated down payment doesn’t come close to making up the difference. They are left out the hundreds of dollars paid to Wells Fargo, a couple thousand dollars paid to break their lease, and without a place to live and a new baby due any day now.
Of course, Martha and I cannot let them go homeless. They (as well as all my sons and other daughter) always have a place here, a safety valve. Unlike so many other unfortunate victims of our economy, Kevin and Beth both still work (though she will be out a while just mothering) and I expect they will eventually find another apartment and even a house. So they aren’t really homeless. But this whole experience raises questions about our system.
Wells Fargo never gave any indication their first appraisal was not satisfactory. They also failed to indicate their appraisal was a roadblock. Why did they wait until the last minute to throw up an insurmountable obstacle? Was there some murky reason they did not want to make the loan and thus sought a second appraisal? The lack of communication by Wells Fargo raises questions about their business practices as well as their concept of service. We Americans love to talk about the free-market and its goodness. At the same time we repeatedly find ourselves as punching bags for the worst customer service, incompetence, and rudeness from our businesses whether it’s the business of cell phones, cable TV, or banking.
Just as the free-market is free to cost families like my daughter thousands of dollars and a place to live, she is free to charge the businesses her own fees. I suspect she will no longer do business with Wells Fargo and its partner Wachovia. That will cost the businesses a mortgage and some bank accounts. My wife and I will similarly sever our decades-long connection with Wachovia by closing savings, checking, and home equity accounts. I will encourage family and friends to take their business, too, elsewhere. We will vote in the most obvious way about which businesses should survive and thrive. But I am still left wondering whether there are some people out there who are really homeless for no other reason than our free market.