Consumer complaint received 2021-08-26
Product: Mortgage — Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — 
Company: WELLS FARGO & COMPANY (WA)

Extract of DEMAND LETTER delivered XX/XX/XXXX : On XX/XX/XXXX, Wells Fargo Home Mortgage delivered to us a PriorityBuyer Preapproval letter for a mortgage of $ XXXX on a non-specific property of $ XXXX value. The preapproval was based on XXXX XXXX evaluation of our 800+ credit reporting agency scores, as well as assets, income and liabilities stated by us via phone interview with a Wells Fargo Mortgage Consultant , and presumably verified via Wells Fargos preapproval review process. This interview constituted a loan application under FDIC CFPA guidelines. 

Our financial profile was communicated in good faith and with full transparency, including the fact that a material percentage of our income is generated through employee stock options, and the fact that a portion of our income is generated by long term and short term vacation rental investment properties. We are long-time Wells Fargo customers with a history of multiple deposit accounts, mortgages and lines of credit, so Wells Fargo is aware of our on-time payment history. Our asset, income and liability information conveyed during the preapproval verbal application was documented in a written and signed mortgage application on XX/XX/XXXX. 

On XX/XX/XXXX we entered a purchase contract for what will be our new primary residence in XXXX, Washington at a purchase price of $ XXXX. We relied on Wells Fargos preapproval in making the offer, without financing contingency. An earnest money deposit of {$16000.00} was placed into escrow and released to the property sellers following inspections on XX/XX/XXXX. More than 50 additional requested financial documents and statements have since been provided to Wells Fargo via the yourLoanTracker portal, including evidence of over $ XXXX in net assets, well over $ XXXX in net income in tax years XXXX and XXXX, and over $ XXXX in monthly income projected over the next two to three years. 

Well Fargo delivered a loan Commitment Letter, signed by XXXX XXXX, XXXX XXXX XXXX XXXX XXXX XXXX, on XX/XX/XXXX reflecting the $ XXXX sales price and $ XXXX loan amount. However, an unexpected condition was included, requiring the payoff of a Wells Fargo mortgage on our vacation rental property located in XXXX XXXX. We were verbally told by our Wells Fargo Loan Consultant that the additional condition is necessary because the underwriter will not include stock compensation or rental income in debt to income ratio calculations. This was also confirmed by our Wells Fargo Loan Consultant via email on XX/XX/XXXX. 

The exclusion of stock compensation and rental income was never presented as a stipulation during the loan preapproval discussions, and the PriorityBuyer Preapproval document is absent of any disclosure that stock compensation and rental income would not be considered as income. However, in order to contain damages and salvage the XXXX transaction, we completed payoff of the vacation rental property mortgage on XX/XX/XXXX. This resulted in damages of {$11000.00} due to wire transfer fees, recording fees, and the delta between long term tax favorable and short-term unfavorable capital gains and state taxes that would have otherwise been avoided had those stock assets been retained and sold as expected after qualifying for long-term capital gains treatment. These damages are documented and can be substantiated if requested by Wells Fargo. 

Further compounding the problem, we understand based on new information conveyed by XXXX XXXX by email on XX/XX/XXXX that Wells Fargo is now rejecting our debt to income ratios because of the absurd exclusion of our 20 year history of rental income on our long term rental investment property in XXXX XXXX. And yet, Wells Fargo still insists on including the principle, interest, taxes and insurance associated with the same investment property, counting against overall debt to income ratios. As best we can ascertain the current situation, despite a Commitment Letter signed by a Wells Fargo EVP promising funding of a $ XXXX loan conditioned on items that have now been fully cleared, Wells Fargo is now stating that the most it is willing to lend is approximately $ XXXX, and might go up to $ XXXX if we fully liquidate our XXXX  XXXX vacation rental investment. Wells Fargo is effectively treating us differently as rental property investors, when compared to how Wells Fargo presumably assesses the debt and income of other business owners. 

[ END ] In addition to the damages outlined at the time of the demand letter, we were forced to pay the sellers of the new property an additional {$4000.00} to cover their carrying costs resulting from the 2 week delay in escrow close caused by Wells Fargo. 

Additional opportunity cost damages caused by Wells Fargo 's breach and {$650000.00} reduction of the promised loan amount are estimated at {$250000.00} based on the 1-year broad US stock market return of 38 % since the Wells Fargo breach.