Consumer complaint received 2024-07-05 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Applying for a mortgage or refinancing an existing mortgage — Changes in loan terms during the application process
Company: WELLS FARGO & COMPANY
State: CA

Complaint narrative:
Loan Purpose : Purchase of primary residence for home in XXXX XXXX, California. 

Complaint : Wells Fargo mortgage staff, XXXX XXXX and XXXX XXXX, misled applicants ( us ) regarding the terms of a XXXX ARM loan. We were quoted a rate with no mention of a reserve requirement. Only after signing loan disclosures and submitting an offer, were we informed of a {$1.00} XXXX reserve requirement, making the ARM unobtainable. 

Impact : Due to misinformation, applicants were forced to accept a higher interest rate on a 30-year fixed loan with Wells Fargo instead of the desired ARM to avoid losing the house purchase XXXX 

Request : Compensation for closing costs to refinance the Wells Fargo loan with another lender ( XXXX was the lender applicants were working with prior to switching to Wells Fargo ) that offered a competitive ARM rate. 

Timeline of Events : 1. Applicants received pre-approval for a loan from another bank ( XXXX ) in XX/XX/year>. Rates provided by XXXX were XXXX ARM at 6.775 % and 30-year fixed at 7.135 %. 

XXXX. XXXX XXXX, mortgage consultant with Wells Fargo, quoted a competitive rate for a XXXX ARM of 6.375 % in XX/XX/year> and 30-year fixed at 6.75 % via email. 

XXXX. Based on these quotes, applicants chose Wells Fargo and submitted a loan application in XX/XX/year>. 

XXXX. Loan disclosures with a higher ARM rate ( 6.625 % with rate lock ) were provided, but no mention of a reserve requirement. We signed the rate lock for XXXX ARM at 6.625 % with Wells Fargo. XXXX XXXX communicated that the ARM product for us requires approval by Wells Fargo, but that he and XXXX were highly confident it would be approved based on our long-term customer status with Wells Fargo XXXX We relied on this information to proceed with the loan process and there was no explanation about what the exception entails ( which we later learned involved a reserve requirement that we could not meet ). 

XXXX. We ultimately received a higher-rate 30-year fixed loan at 7.25 % because the ARM product was not approved for us. We were informed of the undisclosed {$1.00} XXXX reserve requirement for the ARM. This information came too late to secure the desired ARM rate with another lender ( XXXX ) and as a result we were forced to close, not only with a XXXX fixed mortgage, but at a higher rate with Wells Fargo than with XXXX. 

Allegations : XXXX XXXX and XXXX XXXX provided misleading information and lacked transparency regarding the reserve requirement, causing financial harm to us. We discussed the issue with them and the Wells Fargo Branch Manager who said they could not do anything besides escalate the issue to their executive team for internal review. We have submitted a letter with supporting documentation of emails, seeking remediation in the form of Wells Fargo honoring the ARM rate that was offered or compensating us for refinance costs with another lender. They said it typically takes 10 days, usually less, to receive a response. We have not received a response after 10 days so I am now filing with CFPB.

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation