Wells Fargo Raises Rates: Are Homeowners Out In The Cold?

http://www.cnbc.com/id/20107397 ^ | 8-3-07

[gridlock]

Some friends of ours refinanced their homes through one of the telemarketing mortgage outfits. Not smart, I know, but they got a good rate and favorable terms. Unfortunately, the mortgage outfit sold the loan to Wells Fargo without ever paying off the original mortgage. As a result, my friends now had two mortgages on their house, one to their original lender, and one to Wells Fargo.

There was much hemmin’ and hawin’ and threatenin’ and suin’ that followed. At the end of the day, Wells Fargo wound up walking away $450,000 poorer.

Now, that’s small potatoes, I know. But if they made that same mistake 1,000 times over, you are starting to talk about real money.

[Atlas Sneezed]

The draw of a fixed rate mortgage is thinking that they can’t do things like this to you...

Is there no way to protect yourself?

---

Um, this has no effect on mortgages that are closed. Only the ones that are applied for, and they can look elsewhere.

[Grampa Dave]

We are very happy with GMAC/DiTech.

Our son and DIL refied their first home with DiTech. Our first son was concerned because he didn’t know about DiTech.
Everything was done professionally and they closed within a week in their kitchen. They had a new born and an 18 month old.

Later when they got ready to buy a new and bigger home. DiTech did it again. They refied when we did a few years ago and got another great rate.

Our son and DIL are DiTech fans and promote them all the time. A gal in my wife’s office and her know it all husband just refied with a local and ended up with higher payments. The idiot husband said he refused to go to with DiTech or any out of town mortgage company. They had an ajustable with the same pirates and could barely make payments. Now they have a fixed with a ridiculous rate and higher monthly payments. They will probably lose the home unless the wife’s parents help.

[Phantom Lord]

If they sell your mortgage to someone else, you should consider going to DiTech or another loan company

Virtually 100% of mortgages are sold by the original lender to an investor or other lending company.

It is exceptionally rare for the original lender to actually keep the mortgage for any period of time.

[Phantom Lord]

Let me explain my above post a little. The reason that virtually all mortgages are sold is that the original loan was made through the use of funds from a "warehouse line". Basically a massive line of credit, often in the hundreds of millions and even billions. To continue making loans, the company needs to clear off the previous loans to free up money on their line.

They also get a premium on the sold loan for the servicing rights.

Problem now is that a sizeable portion of the "secondary market" as it is called, are paying below par for these loans and thuse the original lender is losing money on the loans. Example would be that a year ago, an investor would pay $105,000 for a $100,000 loans servicing rights. Today, they may only be paying $97,000 for that same loan.

Warehouse lines aren't being freed up. Money to lend is drying up a bit. And the loans that are being sold are being sold at a loss. Can't stay in business that way.

[Lancey Howard]

The draw of a fixed rate mortgage is thinking that they can’t do things like this to you...

???
They can't raise your rate if you signed papers for a fixed rate.

[Grampa Dave]

“It is exceptionally rare for the original lender to actually keep the mortgage for any period of time.”

Your are correct. I don’t believe or know that our DiTech loans have been sold.

What smarted a little with the Wells Fargo selling of the loan was an attempted late charge by the new loan owner on an auto prepayment via Wells.

[SierraWasp]

That’s enough to make a saint cuss and sometime I might even slip!!!