Consumer complaint received 2018-01-05
Product: Mortgage — Conventional home mortgage
Issue: Struggling to pay mortgage — 
Company: WELLS FARGO & COMPANY (CA)

Our family of XXXX emigrated from the XXXX to the United States in XXXX my wife going nine months ahead of our XXXX young sons and myself to blaze a path. After raising our children in an apartment and living in a small townhome for some time, we decided to buy a house in XXXX of XXXX. With XXXX XXXX our sons grown and in their XXXX, we planned to buy a home in which we could live, and eventually retire. 

After meeting with an agent from Wells Fargo, my wife and I decided to make a down payment of {$21000.00}, borrowed from our retirement account deposit or earnest money in our original 30-year mortgage agreement ( Attachment A ). We were, admittedly, not well versed with mortgages and the complex financing involved with purchasing a home, and we acted in good faith, trusting that Wells Fargo would treat us fairly and ethically. 

Instead, they gave us an adjustable rate mortgage loan with a 10-year interest only provision and a complex structure : a primary principal of {$450000.00} and a secondary principal of {$13000.00}. We were also given a secondary mortgage of {$84000.00} in the form of a home equity line of credit. Both first and second mortgages were used in the purchase of the house, and resulted in a monthly payment of {$2300.00} ( shown in Attachment B ), plus other fees like escrow. The hope made to sound like a certainty by our financial adviser was that the value of the house would go up, by which time we could then refinance and rework our monthly mortgage payments to something we could manage. 

Of course, that did not happen. Like many homebuyers, we were blindsided by the severity of the housing crisis. Moreover, we did not fully realize the predatory practices of Wells Fargo until much later. As the monthly mortgage payment, which went only towards paying interest supposed to be temporary with refinancing painted as being a certainty became too high for us to sustain, we were left with little alternative but to apply for a loan modification. 

We hoped that Wells Fargo would try to make right on the unethical mortgage they sold us by giving us a modification that would result in affordable monthly payments, part of which would also go towards the principal. In XXXX, XXXX, we were granted a 5-year loan modification which did reduce our monthly payment to less than 31 percent of our gross monthly income but really only froze the interest rate of our loan for 5 years. This was not a real loan modification. 

In XXXX, when the 5-year loan modification agreement expired, our home was still under water, making refinancing unavailable. We applied for a loan modification under the federal governments Making Home Affordable Program on XXXX XXXX, XXXX. As our gross income had decreased substantially due to my retirement in XXXX XXXX, a loan modification became an urgent need. We included a request for a reduction of principal so the monthly payments would be reduced to something my wife and I could manage. 

After a frustrating experience of being given the runaround and referred to several customer service personnel, we were happy that our loan was finally assigned for processing to a Home Preservation Specialist of Wells Fargo Home Mortgage. 

Again, we expected and hoped that Wells Fargo would help alleviate the plight they put us in and make some strides towards righting their misdeed of giving us a mortgage that turned out to be predatory and unaffordable. 

After submitting all the required documentation, on XXXX XXXX, XXXX, the specialist confirmed by email ( Attachment C ) the following terms : 1. The interest rate will be reduced to 4.625 % ( from 6.375 % ). 
2. The remaining term will be 262 months. Just short of 22 years. 
3. The unpaid principal balance of the first mortgage will be {$450000.00} but will have a balloon payment at the end of {$9500.00}. The reason for this is because with certain plans, you cant extend the term past the scheduled completion date. So by reducing the rate and adjusting the balance to lower your payment, we will have a balance due when your loan is complete. 
4. You are correct that these terms are part of the trial modification agreement 5. Upon successful completion of the trial plan, we will offer a permanent modification of terms. unless there is some sort of title issue that would prevent us from closing with a clear title. 

Although above terms did not meet our primary goal of reduction of principal, we found the fixed monthly payments at a reduced interest rate for the remainder of the term satisfactory enough ; and something we could manage financially. Acting in good faith, we started making payments under the Trial Payment Plan ( Attachment D ) issued on XXXX XXXX, XXXX. 

After making our final payment under the said Trial Payment Plan, a new Permanent Loan Modification Agreement ( Attachment E ) was issued on XXXX XXXX, XXXX. To our shock and utter disappointment, the terms were drastically different from the terms earlier emailed to us ( above ) and clearly disadvantageous to us. Among other terms, the following stands out as drastically different : 1. Borrower promises to pay {$450000.00} ( the Interest Bearing Principal Balance ), plus interest, to the order of Lender. Interest will be charged on the Interest Bearing 2. Principal Balance less any principal reduction due to payments from Borrower at the yearly rate of 4.6250 %, from XXXX XXXX, XXXX. The interest rate Borrower will pay will change 12 months from the date of this Loan Modification Agreement. Borrower promises to pay monthly payments of INTEREST ONLY OF U.S. {$1700.00} beginning on XXXX XXXX, XXXX until XXXX XXXX, XXXX. Effective XXXX XXXX, XXXX, interest will be charged on the Interest Bearing Principal Balance from the Borrower at the yearly rate of 5.6250 % and the Borrower promises to pay monthly payments of INTEREST ONLY OF U.S. {$2100.00}, beginning on XXXX XXXX, XXXX until the ADJUSTABLE RATE TERM EXPIRATION on XXXX XXXX, XXXX ( the Conversion Date ), which is in accordance with the Note. Borrower will continue to make monthly payments on the same day of each succeeding month until principal and interest are paid in full, except that, if not sooner paid, the final payment of principal and interest are payable on XXXX XXXX, XXXX, ( the Maturity Date ) Although there was an option to appeal, we were told that should we decide to do so, the terms would revert back to those of the original, unmodified agreement, which would mean higher monthly payments during the appeal period and, possibly, the rest of the term, should the appeal not be granted. 

When we repeatedly requested an explanation for such drastic change in terms, we were told that the investor a mortgage-backed security to whom our loan was sold was not agreeable to granting a loan modification. ( Wells Fargo would not disclose who this investor was ) Upon the expiration of the ADJUSTABLE RATE TERM on XXXX XXXX, XXXX, our monthly payment for the first mortgage has increased from {$2800.00} ( {$2100.00} for interest only plus {$740.00} for escrow ) to {$3400.00} ( {$1500.00} for interest, {$1200.00} for principal and {$740.00} for escrow ) shown in Attachment F. In addition, the account draw period on the home equity line of credit ( second mortgage ) ended on XXXX/XXXX/XXXX resulting in an increase of our monthly payment from {$350.00} to {$520.00}. 

The monthly payment for these loans is something my wife and I simply can not bear. 

We were proud to make a facet of our American Dream come true with the purchase of our home in XXXX. For more than a decade, we have fought and worked and struggled to make ends meet, and despite some real hardships including the housing market crash we have always somehow managed to pay our mortgage on time. We have tried working with our bank to come to some reasonable solution to our current situation and have seen little, genuine help from their end. 

We are desperate to find some way to keep our home and hope your agency can point us in the right direction