Consumer complaint received 2021-02-09
Product: Mortgage — FHA mortgage
Issue: Struggling to pay mortgage — 
Company: WELLS FARGO & COMPANY (MD)

FHA Case No. : XXXX I suffered a financial hardship in XXXX due to health issues and unemployment. Wells Fargo via its attorneys filed a foreclosure action on XX/XX/XXXX. However, Wells Fargo failed to issue to me the required face to face letter pursuant to the XX/XX/XXXX, Mortgagee Letter XXXX. I submitted to Wells Fargo an application for modification which Wells Fargo denied on XX/XX/XXXX. I appealed this denial as Wells Fargo failed to provide the specific reason each modification option was denied and failed to provide an NPV report as the denial was purported to be based upon income. 
As the legal process was playing out, I reached out to Wells Fargo again in XX/XX/XXXX in an effort to save my home and Wells Fargo agreed to review me for a loan modification. Once again Wells Fargo denied me for a loan modification claiming my income was {$5100.00} when in fact my income was much higher. I am self-employed and provided my Profit and Loss statements as well as all of my bank statements. All of which reflected an income of twice that claimed by Wells Fargo. Wells Fargo has refused to provide any documentation as to how it calculated my income. I appealed the denial. That appeal is attached along with the complete RMA and documentation as to income. The details of my appeal are as follows : The denial letter does not state the name of the investor or if there are any investor restrictions that prevented Wells Fargo from modifying my loan. Without this information, my ability to properly utilize my appeal rights under RESPA are substantially limited. Nevertheless, Wells Fargos denial of my application is an error as I do qualify for loan modification. 
The Denial Letter states that I was denied for the FHA HAMP Loan Modification and Repayment Plan because : Based on the documentation you provided, we are unable to create an affordable mortgage payment that still meets the requirements of the program. We reached this decision by reviewing your monthly income, which is calculated as {$5100.00}, along with reviewing the other information you provided. 
There is no explanation as to how my income was calculated as {$5100.00} per month or what documents or time period that was based off of. 
On XX/XX/XXXX, I submitted to Wells Fargo an updated RMA and P & L with supporting bank statements. Pursuant to the documents, my income from the XX/XX/XXXX XX/XX/XXXX P & L was as follows : Real Estate {$21000.00} Catering {$3000.00} {$24000.00} divided by 3 months = {$8200.00} per month. 
However, Wells Fargo did not make a decision at that time and requested that I continue to submit my bank statements and other documents and on XX/XX/XXXX, I submitted an updated P & L. Pursuant to the XXXX XXXX XXXX XXXX, my income from XXXX was as follows : Real Estate {$49000.00} Catering {$13000.00} {$63000.00} divided by 6 months = {$10000.00} Under FHA HAMP, a payment is affordable if it can reach 31 % or less of a borrowers income. 31 % of XXXX = {$3200.00}. As I am without the actual inputs, below I have provided are best estimates that show why I should have easily qualified based on the income in my XX/XX/XXXX XXXX XXXX XXXX. Below is the summary of a modification based on the assumed total amount modified unpaid principal of {$490000.00} and an interest rate of 2.45 % ( interest at that time XXXX XXXX XXXX XXXX amortized over 30 years. 
Summary Principal borrowed : {$490000.00} Regular Payment amount : {$1900.00} Final Balloon Payment : {$0.00} Interest-only payment : {$1000.00} *Total Repaid : {$690000.00} *Total Interest Paid : {$200000.00} Annual Payments : 12 Total Payments : 360 ( 30.00 years ) Annual interest rate : 2.45 % Periodic interest rate : 0.2042 % Debt Service Constant : 4.7103 % *Total interest paid as a percentage of Principal : 41.310 % This calculation shows that the total principal, interest, taxes, and insurance payment would have been {$2400.00} which is less than the {$3200.00} ceiling of 31 % of his income. In addition, I had submitted with this appeal an updated P & L year to date for my real estate business with supporting documentation and bank statements. My income year to date is as follows : Real Estate {$100000.00} Catering {$13000.00} {$110000.00} divided by 10.5 months = {$11000.00} 31 % of {$11000.00} = {$3400.00}. Thus, I should be approved if the modified monthly payment is less than {$3400.00}. Below is the summary of a modification based on the assumed total amount modified unpaid principal of {$490000.00} and an interest rate of 2.283 % ( interest at that time XXXX XXXX  XXXX ) amortized over 30 years. 
Summary Principal borrowed : {$490000.00} Regular Payment amount : {$1800.00} Final Balloon Payment : {$0.00} Interest-only payment : {$930.00} *Total Repaid : {$670000.00} *Total Interest Paid : {$180000.00} Annual Payments : 12 Total Payments : 360 ( 30.00 years ) Annual interest rate : 2.28 % Periodic interest rate : 0.1903 % Debt Service Constant : 4.6072 % *Total interest paid as a percentage of Principal : 38.215 % This calculation shows that the total principal, interest, taxes, and insurance payment would have been {$2400.00} which is less than the {$3400.00} ceiling of 31 % of his income. As such, the denial for a modification under the FHA HAMP Program is incorrect as I can achieve a monthly payment equal to or less than 31 % of my documented income. 
Even if Wells Fargo were correct in its income calculation, which I emphatically state those calculations are incorrect, I would still qualify for a loan modification if Wells Fargo utilized a partial claim as allowed up to 30 % of the unpaid principal balance pursuant to FHA-HAMP guidelines. 
FHA has publicly stated that it is working aggressively to halt and reverse the losses represented by foreclosure. While FHA offers a number of various loss mitigation programs including FHA-HAMP, those programs are only as successful as the servicers handling the accounts. 
Wells Fargo has mishandled my case from the beginning by failing to issue the required Face to Face letter. Wells Fargo continues to deny me for a loan modification despite the fact that I have provided income documentation that demonstrates more than double the income that Wells Fargo claims. 
Wells Fargos reputation to cause financial harm to borrowers is well evidenced to include the unprecedented move XX/XX/XXXX, by the Federal Reserve to punish Wells Fargo by not allowing it to grow its assets until the bank cleans up its act. To date the Federal Reserve has not lifted that cap. Wells Fargo is harming not just me, but FHA by causing another foreclose loss when the reality is I can sustain homeownership by making my mortgage payment if only Wells Fargo would allow me to do so. 
After presenting this documentation to Wells Fargo, they continued to erroneously claim to have calculated my monthly income to be {$5100.00} without given specific mathematical calculations to explain how they came up with this incorrect and low amount. Wells Fargo claims that it calculated my income using the XXXX and XXXX Profit and Loss statements. However, Wells Fargo failed to state exactly how many months it used for each year as I had not submitted a complete year for XXXX. The most recent P & Ls I submitted for XXXX was through XX/XX/XXXX. Wells Fargo appears to claim that it used 12 months of income for XXXX while not defining the number of months for XXXX. If Wells Fargo used 12 months of income for XXXX using the previously submitted information for the first six months, then 12 months @ {$8100.00} = {$98000.00} which is not the claimed gross receipts. The gross receipts amount for just the first six months of XXXX ( {$50000.00} ) divided by the claimed monthly income of {$8100.00} is XXXX. Did Wells Fargo use 6 months and 1 week of income? That makes no sense as I submitted the Profit and Loss statements for each quarter with supporting documentation. 

Assuming that Wells Fargo used 6 months of income for XXXX and then 6 months of income for XXXX the numbers still do not match Wells Fargo claimed monthly income of {$5100.00}. XXXX @ {$3500.00} X 6 = {$21000.00} plus XXXX @ {$8100.00} X 6 = {$49000.00} = {$70000.00} or {$5800.00} per month. However, that is not correctly accounting for my income as I provided a P & L through XX/XX/XXXX so 10.5 months of XXXX must be utilized not 6 mos. Therefore only 1.5 months of income from XXXX would be used. 
I am requesting that Wells Fargo actually provide the mathematical calculations it utilized rather than just generically stating it calculated my income " using XXXX and XXXX Profit and Loss statements '' without clearly stating how many months it used for each year. Wells Fargo claims the " monthly income was then averaged out over the years which came to a monthly gross income of {$5100.00} ''. Using the numbers provided by Wells Fargo, I can not arrive at {$5100.00}. Wells Fargo needs to provide the mathematical calculation it used to arrive at this erroneous amount of {$5100.00}. 
Wells Fargo claims that it did not use my income from XXXX XXXX " as the supporting documentation provided was not sufficient to validate the income. '' I provided extremely detailed documentation of my income from XXXX XXXX to include invoices, receipts and the bank statements that reflected the deposits. Wells Fargo never notified my attorney nor me that the documentation that I provided was not sufficient. I am happy to provide any additional documentation required to prove my income. However, even if Wells Fargo only used my real estate income at this point, I still qualified ... 
Real Estate Income per commissions YTD XX/XX/XXXX XX/XX/XXXX. {$100000.00} divided by XXXX = {$9800.00} Income is supported by extensive documentation including Commission statements and bank statements and reflected in the YTD P & L. 
Loan amount owed {$490000.00}. Monthly escrow {$570.00}. 
Per FHA/HAMP guidelines the front-end DTI ( PITI ) can not exceed 31 %. Based on the monthly income of {$9800.00} 31 % = {$3000.00} FHA the current market rate for loan modifications. That is a range as of date submitted of 2.25 % - 2.625 % Here are the PITI payments at various interest rates 2.25 % XXXX PITI {$2400.00} 2.50 % XXXX PITI {$2500.00} 2.75 % XXXX PITI {$2500.00} 3.0 % XXXX PITI {$2600.00} 3.25 % XXXX PITI {$2700.00} 3.5 % XXXX PITI {$2700.00} All payments are under the 31 % DTI requirement. 
Wells Fargo claimed that it could not reach me and therefore it could not respond to my complaint. Yet Wells Fargo now claims that it can not talk to me because my loan is in active litigation. Which is it Wells Fargo? You can not claim that you can't reach me in order to talk with me but then claim when I call you can't talk to me because I'm in active litigation. 
Wells Fargo is choosing to totally ignore the extensive documentation I have consistently provided them and appear to be literally pulling numbers out of the air that can not be supported. In the Wells Fargo letter dated XX/XX/XXXX in response to the updated information requested and provided, your response was we've determined that you still do not meet the requirements for payment assistance quite simply, this is an impossible outcome IF Wells Fargo actually reviewed the submitted documentation. Wells Fargo is playing games as to conversations it claims it could not have with me. This is not a game to me. This is my home and I can afford to make my payments if only Wells Fargo would fairly and equitably review me for a loan modification as required by FHA and HUD. 
Copy of Appeal : XXXX XXXX  XXXX? XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX  XXXX