Man Forecloses on Wells Fargo!

In this time of depressing and maddening news about banks and their infuriating indifference to the suffering of underwater homeowners, it’s refreshing to know that some of us are not taking their shenanigans lying down. Here’s a story I found about one homeowner who decided to FIGHT BACK! Will he win? Only time will tell…

Why Wells Fargo Became the Target of Foreclosure

According to The Philadelphia Inquirer and retold by Casey Bond of GoBankingRates.com,  it all started when music producer Patrick Rodgers, who purchased a $180,000 home in 2002, was suddenly notified last year by Wells Fargo that he needed to insure the property for $1 million. The bank demanded he insure the full replacement value of the home, not the purchase price, to prevent a total loss should devastating damage occur. Rodgers didn’t believe his home was worth that much and refused.

When Rodgers declined to up his coverage and was presented with forced-placement insurance instead, he wrote to Wells Fargo demanding further explanation. In fact, he wrote four times over the course of a year with no response.

The Real Estate Settlement Procedures Act

After some research, he learned that the Real Estate Settlement Procedures Act (RESPA) of 1974 requires that mortgage lenders acknowledge written requests within 20 business days. They are subject to damages or penalties if they fail to respond. So, when his written requests for more information were ignored, Patrick Rogers took Wells Fargo to court.

The court ruled in favor of Rodgers and he received a $1,173 judgment against Wells Fargo. However,  the bank  didn’t pay up, so Rodgers began foreclosure proceedings against  local office Wells Fargo office.

March 4, 2011 is the date scheduled for a sheriff’s sale of the contents of Wells Fargo Home Mortgage office  to cover the judgment and additional court and sheriff’s costs, though it’s likely Wells Fargo will pay a settlement to end the dispute before the sale happens.

In a late-breaking addenda to this story, Rodgers and the bank did,indeed, come to an agreement as mentioned in the Philadelphia Inquirer. Both sides declined to offer details, but Rogers said the bank had agreed to pay down his mortgage to the extend equal to the time and effort he had expended in his quest against the bank and, further, the bank agreed that his home insurance should equal his most recent appraisal at $255,000.

How You Can Learn from Rodgers

Technically, Patrick Rodgers didn’t really foreclose on Wells Fargo, but he brings an important issue to light. As a responsible, employed homeowner who felt his mortgage lender was taking advantage of him, Rodgers didn’t sit back and allow it to happen. He researched his rights and stood up against the bank, ultimately winning his case.

If you suspect your mortgage lender, or any other financial institution for that matter, is asking something questionable or even illegal of you, there are laws in place to protect you. It’s up to you to know what they are, but you don’t have to feel like your situation is hopeless or unchangeable. It’s not if you’re serious about changing it.

 


How Do I Know I Have Enough Home Insurance?

These days it’s a bit confusing because home values have slipped considerably in many places. The key, though, is how much would it cost to replace your home if it were severely damaged or if it were burned to the ground?   Obviously, that value doesn’t refer to the purchase price because that included the land which in 99.9% of disasters is still there. The question involves the price of construction in your area.

Home values may have dropped. Has the price of home construction dipped, too?

The Insurance Information Institute recommends the following:

  • It’s a good idea to insure your home for the cost of rebuilding it. Check your homeowners’ policy to see the maximum amount your insurance company would pay if it had to be rebuilt.
  • Find out what it would cost to rebuild your home. Your insurance agent can calculate rebuilding costs for you or you can hire an appraiser (call me at 626-641-0346 for references). Make sure your insurance agent knows about all improvements you’ve made, such as a deck or larger kitchen.
  • Make sure the value of your policy is keeping up with increases in local building costs. Many policies include an inflation guard… if yours doesn’t, consider purchasing one.
  • Find out if you have a “replacement cost” policy for your house. If you own an older home, you may have a “modified replacement cost” policy.
  • For the contents of your home – find out whether you have “replacement cost” or “actual cash value” insurance.
  • Check the limits on certain personal possessions, such as jewelry. Consider buying an “endorsement” to insure valuables separately.

Insurance is one of these intangible products that we pay for and hope we never use. Make sure if you do need it, you have the coverage that you need.

Lose Your Home: Lesser Known Ways

Half million dollar house in Salinas, Californ...
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Nowadays, we face a gigantic wave of foreclosures, the likes of which we haven’t seen since the Great Depression. Most of these foreclosures, maybe 99%, occur because the borrower did not make the mortgage payments, often over a long period of time.  When faced with a choice of making mortgage payments, paying property taxes or  homeowner’s insurance, many distressed homeowners don’t know which to choose.  Really, though, you can lose you home if you fail to pay any of these.


Let’s take property taxes, for instance. Most boroweers have impound accounts which collect a portion of the taxes and insurance each month and then pay them when they are due. If the borrower fails to make the mortgage payments, eventually the mortgage holder will pay the taxes and insurance and, of course, add the cost to the borrower’s loan.

But what if you don’t have an escrow account? In that case, failing to pay property taxes makes the taxes a lien against the property. This lien has priority over even the first mortgage. The tax assessor will inform the mortgage holder of the debt. With this information, the bank now has the right to foreclose as his secured loan is in jeopardy. Non-paid property taxes could become a huge burden on the property, eventually shutting out the lender. Before that happens, banks often foreclose.

What happens if you do not pay property insurance or fire insurance?  Again, the unpaid insurer will inform the bank. Insurance does not become a lien. But now the lender’s security for the loan is in jeopardy. What if the house burns down or suffers a major catastrophic event? The lender as well as the homeowner would have no financial protection. Unpaid insurance, then, will cause the lender to supply it by placing another policy on the property. The cost will, of course, be added to the loan and in this way become a lien on the property.

Reading you loan docs–boring, boring I know–brings many other surprises. If you allow the house to deteriorate, your lender has the right to foreclose. Or, if you make major additions or renovations without the lender’s “permission”, the lender has the right to foreclose. These, of course, are rarely if ever enforced, but do exist in most loan documents. Very few homeowners, I would hazard, run to get their lender’s permission to add a bathroom or renovate the kitchen.

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