Tuesday, December 11, 2012

Financially Strapped Homeowner: Wells Fargo Wiped Out My $250K Home Equity By Losing My Loan Modification Docs Over & Over, Then Forcing Foreclosure Sale

In San Francisco, California, the San Francisco Chronicle reports:

  • Larry Faulks says his bank robbed him of over a quarter of a million dollars.

    By selling Faulks' San Francisco house at a foreclosure auction, Wells Fargo wiped out all his equity, he said. Unlike most struggling homeowners, Faulks, 59, was not underwater on the home his family bought in 1962; it was worth considerably more than he owed on it.

    Wells Fargo says it tried to work with Faulks but couldn't find a way to avoid foreclosure, as his income was too limited.

    Outside legal experts who reviewed his case said it highlights how California law doesn't safeguard the rare homeowners with equity in a foreclosure.
  • In Faulks' case, after an illness and failed surgery left him too disabled to continue his work as a technical writer, he sought a loan modification on his mortgage, which carried a sky-high interest rate of 8.2 percent.

    Once he could no longer afford his payments in spring 2010, he embarked on a two-year quest in which he submitted multiple applications, faxed in reams of paperwork, spent hours on the phone, attended in-person counseling events, contacted politicians, housing counselors and government agencies - all to no avail.

    "The bank lost document after document and then claimed I never sent them, and forced me to repeatedly start over," he said.
  • At a foreclosure auction in May, a real-estate investment company called DMG Asset Management bought the house for $705,000. That was a bargain compared with its apparent value.

    The house, built by famed developer Joseph Eichler and on a level lot in Diamond Heights, is surrounded by homes that sell for over a million dollars. Online real estate site Zillow pegs its value at $1 million; DMG's attorney said it's worth $950,000 to $975,000.

    Faulks' mortgage was $574,627. After adding in missed payments and late fees, his total debt was $691,914. As is required by law, he was sent $13,086 for the difference between the $705,000 auction sales price and his debt. Wells also offered him $20,000 in relocation assistance.

    But that amount is dwarfed by what he might have netted on the open market. If he had sold the home himself for $1 million, he would have been able to pay the bank everything he owed and walk away with a nest egg of at least $250,000.

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