Wells Fargo, You Never Know What Hit You.
June 20, 2010 2:48 PM   Subscribe

Wajahat Ali, a solo practitioner from California, takes on Wells Fargo in an attempt to get his clients' home loan modified. Lots of ball dropping and passing of the buck ensues. He describes the Kafka-esque nature of the experience.
posted by reenum (41 comments total) 15 users marked this as a favorite
They lied about getting roughly twelve times the income they had.

Okay if you're stretching a $30 000 income to $35 000 to qualify but why on earth should they get to keep that house?

Then the husband couldn't be bothered doing what he was supposed to in order to stop foreclosure. Nightmare people.
posted by shinybaum at 3:32 PM on June 20, 2010 [4 favorites]

You read that entire article and picked out the couple of tidbits that reflected poorly on the family, completely ignoring the shitstorm of ridiculousness perpetrated by Wells Fargo?

posted by HopperFan at 3:38 PM on June 20, 2010 [2 favorites]

Excellent article.
posted by Sticherbeast at 3:45 PM on June 20, 2010

Yeah. I already know banks are evil though. I assumed the majority of Americans who are getting shafted were genuinely getting shafted, this couple just seem ridiculously unsympathetic. Or I'm ridiculously unsympathetic towards people on under $30 000 a year who think they should get a swimming pool and spare bedroom for no apparent reason.

That seems more like obnoxious greed than genuinely getting it in the naughty place from evil corporate America.
posted by shinybaum at 3:45 PM on June 20, 2010

Well, if they are obnoxious, they certainly don't have the market cornered.
posted by oddman at 3:50 PM on June 20, 2010 [1 favorite]

1. I'm almost certain this is a double, though I can't find the other FPP at the moment; and

2. the couple of tidbits that reflected poorly on the family

WTF? They exaggerated their income by a factor of twelve. If I go into Best Buy and buy a TV with a check made out for twelve times the amount that's actually in my checking account, should I get to keep that TV? If I buy a car and only make one of my twelve monthly payments in the first year, should I keep the car?

The fact that Wells Fargo encouraged them to do it is undeniably douchey, but ultimately immaterial. If someone puts a gun in your hand and encourages you to fire it at someone, you're still responsible if you decide to pull the trigger.

On the stated-income loan, the bank claimed Carl was making $25,000 a month. In reality, Carl was netting a salary of $26,000—a year.

If this qualifies as a minor technical detail that no one can reasonably get upset about, then shit, I'm off to buy a mansion too.
posted by ixohoxi at 3:50 PM on June 20, 2010 [1 favorite]

And by "ultimately immaterial", I mean immaterial in the sense that dude shoulders a hefty portion of the blame regardless. I certainly didn't mean to leave the bank off the hook for their incredibly sleazy business practices.
posted by ixohoxi at 3:52 PM on June 20, 2010

"They exaggerated their income by a factor of twelve."

Yes, I can read, thanks. It was a stupid thing for them to do, and they shouldn't have gone along with what the broker assured them was something "everyone was doing." It's not a minor technical detail, it's part of a larger problem.

The same family was trying to work with the bank and make payments, and getting stymied at almost every turn. That's what I find the most objectionable.
posted by HopperFan at 3:56 PM on June 20, 2010

"If I go into Best Buy and buy a TV with a check made out for twelve times the amount that's actually in my checking account, should I get to keep that TV? If I buy a car and only make one of my twelve monthly payments in the first year, should I keep the car?"

Those are actually terrible analogies, and don't apply to their situation at all.
posted by HopperFan at 4:02 PM on June 20, 2010

Predatory lenders. Feckless borrowers. Almost complete and total lack of regulation and oversight by government.

Massive failure.
posted by Xoebe at 4:18 PM on June 20, 2010 [1 favorite]

A lot of borrowers weren't feckless. Wells Fargo was one of the worst banks for racialized lending practices. Scummy company is scummy.
posted by shinybaum at 4:20 PM on June 20, 2010

This is the sort of nightmare I always think of when someone suggests that the magic of markets ensures that big for-profit businesses are always more efficient and better run than non-profits and government offices. Or when someone floats the idea that the entities that make up a market can effectively regulate that market.
posted by Western Infidels at 4:20 PM on June 20, 2010 [2 favorites]

This lawyer comes across as totally immature. There are many, many lawyers working just as hard or harder for far less sympathetic clients. And there are probably thousands of people who have had just as frustrating experiences with the bullshit that passes for customer communication at large corporations like Wells Fargo. I'm hoping all his "I'm a hero!" trumpeting is just a persona affected for the sake of the story. If not, yikes.
posted by sallybrown at 4:48 PM on June 20, 2010 [1 favorite]

This lawyer comes across as totally immature.

Well, yeah. That's part of the whole point of the essay, his being just a kid fresh out of law school. And even though his clients made some very bad decisions, he's still responsible for their well-being, and he was able to come to their defense and save them. I think he's earned the right to be proud of that.
posted by Faint of Butt at 5:05 PM on June 20, 2010 [5 favorites]

It's more like going into a best buy, telling the clerk you don't have enough money and then having him say "Oh, don't worry we won't cash the check, we'll just file it away!"

Or something like that. The owners were encouraged by the bank to misstate their income.
posted by delmoi at 5:05 PM on June 20, 2010 [6 favorites]

That's part of the whole point of the essay, his being just a kid fresh out of law school

I don't mean immature as inexperienced in the practice of law. That's a given. I mean immature as lacking life judgment or perspective. That's what I got from his writing--and that's not a given even for lawyers fresh out of law school--at least in my experience during and after law school.
posted by sallybrown at 5:16 PM on June 20, 2010

I really appreciate him documenting each and every turn of the run-around they gave him. I loved details like being sent from loss-mitigation to bankruptcy to dual-liens and back again, the page covered with phone numbers, the completely inappropriate phone numbers with surprised people on the other end, and the secret right number where nobody answers and you can only leave a message. We've all been in a similarly ridiculous situation. (For me it was when one major corporation insisted they had to talk to my agent at another major corporation, but neither was willing to dial out -- both wanted me to get the other companies' agent to dial in.) But it's rarely documented in such an amusing way.
posted by salvia at 5:19 PM on June 20, 2010 [1 favorite]

I saw this as much less about the Lipkins, who are just the unobtainium of the story, and more about Waj's recovering his dignity after his inability to find a job with his shiny new degree. He is obviously immature and he knows it; he's trying to correct that by learning what is necessary to work on his own and score a victory. His clients aren't perfect but there is solid legal foundation for his battle; when you are a lawyer that's what matters. What makes the battle different from most such accounts is the maddening inability to even get the foe to acknowledge his existence. To win such a battle as your first exercise in your new vocation really is a special thing. I hope Waj does well. He writes very well of his experiences.
posted by localroger at 5:30 PM on June 20, 2010 [1 favorite]

The issue I have is that the bank was making what an investment in this property. They had vast financial resources and information. Yet they choose to employ agents who willfully mistated customer income. They called these products liars loans. Then they were shocked that this all went bad and they were left holding a bunch of now worthless houses. Now they want to blame some poor ignorant person for losing a game they designed and get a 700 billion dollar bailout so they don't lose their mansion. My answer is screw this. We should simply forgive all the bad mortgages and give people full title to their homes. Unless Wells Fargo can prove they created a single memory at a family Christmas or wrestled with their boys in te backyard or listened to the rain fall softly on the roof they get not one more dollar. Let the lesson be made clear to the usurers you lend at your peril and if you push this far you will lose your whole claim.
posted by humanfont at 6:22 PM on June 20, 2010

I'm only a little way into the article, but I love his description of being fresh out of school and wondering if everyone realizes how incompetent he is. I spent my first couple of years as a freshly minted programming-degree-holder wondering how I could've managed to not learn anything I really needed to learn.
posted by Ickster at 7:16 PM on June 20, 2010

It's pretty clear that his clients are a bit useless - that's why they're in the messed up situation that they are. Nice combination of self aggrandizement and deprecation in the story though.
posted by Sebmojo at 7:43 PM on June 20, 2010

The same family was trying to work with the bank and make payments, and getting stymied at almost every turn. That's what I find the most objectionable.

What payment plan could possibly help someone making $26,0000 a year afford a $585,000 mortgage?

It seems Wells Fargo needs a reality-check department. It would save everyone a lot of time and anguish.
posted by madajb at 7:52 PM on June 20, 2010

I was completely distracted by the family in the article. I don't care what the loan officer said, you are equally culpable if you buy a $585,000 house with $26,000 in annual income and three dependents. A 20-year interest-free mortgage STILL wouldn't pay that house off.

I get that the author was trying to highlight how surreal the whole loan modification process is, but he needs to pick a better example family. There are hundreds of thousands of them out there.
posted by bpm140 at 8:02 PM on June 20, 2010

It's pretty clear that his clients are a bit useless - that's why they're in the messed up situation that they are.

They are in the same situation as the rest of us, even those of us who can afford our mortgages. There was an incredible asset bubble created by a handful of greedy people that inflated the property values with unlimited credit. Those same people have gotten off with a simple slap on the wrist while millions are stuck paying it all off in the form of ruined neighborhoods with foreclosed and short selling home on each street. I'm done blaming the victims. The time has come for some accountability on the part of the bankers and lawyers who created this mess.
posted by humanfont at 8:05 PM on June 20, 2010

They are in the same situation as the rest of us, even those of us who can afford our mortgages.

I call bullshit, good sir. While I agree that not nearly enough has been done to the folks that orchestrated the sell-side of this meltdown, that doesn't give a free pass to people who bought far beyond their ability to pay.

I put *half* down on a house in SF in early 2007 and have greatly enjoyed watching more than $200,000 of value slip away. After all the bank is still gonna get theirs; I'm the one who lost roughly half my savings.

So please understand if I bristle when you compare me with someone who complicity committed fraud and then complains about the results.
posted by bpm140 at 8:37 PM on June 20, 2010 [7 favorites]

I identified with Waj because, while I didn't start my "legal career" as a solo, I wound up doing just that within a couple of years, due mostly to bad choices on my part. I certainly had my share of crappy cases and hopeless clients, and lacked the sense I now have to have found some other way besides taking them as clients. And someone needed to tell these people that they needed to do something besides "fight" to keep the house that they couldn't possibly afford. In situations like this, I'm way past blame, because everyone bears some and what is the point? Waj wouldn't get paid for that bit of hard advice, but it would have been the right thing to do-- the best advice for the client.
posted by missouri_lawyer at 8:40 PM on June 20, 2010

It really doesn't matter who is at fault for the initial lone. We have had that discussion a thousand times here, and it always splits between the people saying that the banks are responsible for making sound investments (true) and that the borrowers are responsible for making good financial decisions (also true). I would be happy to have that discussion again, because I think it is an interesting one, but seems to be missing the important point of this article: that the processes that banks for handling loan modifications (and short sales, and nearly everything else) is severely broken. This affects people who you think deserve it as well as people you would not feel deserve it. It also affects the banks, which end up with unnecessary foreclosures, which carry an even bigger loss. And neighborhoods, which end up half empty.

But it is not in the bank's interest to make the situation better, even for themselves. They can ride it out, and get bailout money to cover their losses. In fact, the worse they can make things look, the more money they can get.

If you want to talk about greed, how about the banks buying up these "toxic" loans at a huge discount, getting government money for buying them on top of that, and then trying to collect the full value of the mortgage, while making it nearly impossible to get a loan mod?
posted by Nothing at 8:57 PM on June 20, 2010 [3 favorites]

I was sure this was a double, until I found it had only been posted as a comment. Fantastic article.
posted by klangklangston at 9:04 PM on June 20, 2010

For those defending the family, it's of particular note that one of the owners who was foreclosed upon worked as a mortgage processor for Countrywide before obtaining the mortgage described in the article. In any number of documentaries and articles, we've seen seniors, the abject poor, recent immigrants, or those who just didn't quite get what was going on get snookered into Very Bad Mortgages by Really Awful Banks. That's not what happened here; there appears to have been a substantial degree of avarice on both sides.

As such, I too was initially distracted by the family's choices when I read this article. But suddenly, I had a realization, and was able to actually appreciate it. I discovered the joke -- no doubt an intentional one on McSweeney's part.

In an ironic reversal of the typical yarn, the lawyer's the only character in this one who isn't an asshole.
posted by I EAT TAPAS at 9:07 PM on June 20, 2010 [7 favorites]

I refinanced my home in 2003, I had a fixed 30 year mortgage. The mortgage broker wanted me to take an ARM mortgage, I insisted on a fixed rate. I remember him saying I was being short sighted and foolish to sign a fixed rate mortgage. Thank goodness I stuck to my guns and insisted on the fixed rate.
posted by JujuB at 9:16 PM on June 20, 2010

Color me completely unsympathetic. The family committed fraud - whether they knew it was illegal or not, they should have known it was immoral. Those of us who played by the rules, bought smaller houses we could afford given our real incomes, and now have to put up with what is, essentially, lost equity - all while these jerks are able to renegotiate their commitment and stay in a nicer place that they were able to obtain ONLY BECAUSE THEY LIED - really causes one to reconsider whether having the moral high ground, in this day and age, is worth any more than its now-decimated property value.
posted by aberrant at 9:22 PM on June 20, 2010 [2 favorites]

Were we supposed to feel bad for the family? I thought the drama was "young lawyer faces down his own insecurity along with faceless institution, and (gets lucky and) wins!" I kinda feel like if the point of the article isn't "oh the poor family," it's bad form to rag on them.
posted by salvia at 10:10 PM on June 20, 2010 [1 favorite]

It is possible to separate how you feel about this.

I'm delighted for Waj. His clients were entitled to sound legal representation; they got it. Waj won a significant (narratively speaking) victory for his clients and told an interesting tale about it. I hope someone hires him or whatever we do with adorable lawyers these days.

I've got very little sympathy for the family. I don't care that they lied on their paperwork; a self-certified mortgage is practically an invitation to make the numbers up, and their slimebag predatory broker was completely complicit here. If you don't realise that you're going to make up for the easy bullshit numbers with rapidly escalating interests rates later, well, you're a moron and life is going to be tough.

What pisses me off is the idea these people had that perfectly normal middle class people are somehow entitled to a five bedroom house with a pool. The broker gave the paperwork and the bank gave them the money, but no fucker made them pick out a $535,000 house. If what you can afford to rent is one half of a one family house, what the HELL makes you think that what you can afford to buy is McMiniMansion?
posted by DarlingBri at 10:54 PM on June 20, 2010

"a five bedroom house with a pool...a $535,000 house"

I live in Santa Monica. I find this hilarious. I make a fair amount of money and will NEVER be able to afford a five bedroom with a pool where I want to live. These people evidently lived where they could probably afford roughly the same I could out here on much less money, but chose much differently.
posted by flaterik at 11:09 PM on June 20, 2010

Overstating their income—lying to the banks, really—that's obviously not a great idea (not nearly as much as all the lying they're doing to themselves). But their self-righteous entitlement makes me sick:
"I partially blame ourselves for this," Natalie added. "But then again, I also blame the economy. And I also blame the banks. Ever since we got in trouble, we've been trying to work with them! I want to keep my home. I want to stay in my home. I've tried to keep my home! I want to raise my children in my home."
I want! Mine! Like a fucking child. Well, little one, you can't have. You can't have, because it too much. You don't just get things just because you want them. And what's all this "my home" shit? That's the bank's home, homes.
posted by Civil_Disobedient at 12:08 AM on June 21, 2010 [6 favorites]

The 585k dollar dream home is only a 270k dollar dream home when it's heading to foreclosure; since following the asset bubble collapse prices have returned to a more reasonable level. Furthermore we have no idea what their income was at the time of the HAMP acceptance. They went home shopping and engaged a realtor to provide them with professional advice. They went to qualifiy for a loan and the broker, also offering them professional advice told the to put the numbers in here and get the money for the house the realtor showed them. The lack of empathy is disheartening. To those who've lost money put into down payments and otherwise doesn't it bother you that the bank has zero equity aet stake unless you become destitute and they have to foreclose. It certainly bothers me that my home has lost value and yet the banker has nothing on the table. In fact their continued foreclosures and practices described in the article continue to cause further price declines; thus they are screwing me out of moor of my money. Should I be forced to sell do to some unanticipated event, I would lose equity and the bank would get all the interest they've collected plus some. In fact their effective interest will have been higher since I will have mostly been paying intereset the first few years of my supposed 30 year mortgage.

I go back to the fact that the bankers offered loans which they internally called liars. These loans had what we all recognized at the time as quite insane adjustment terms. They knew the terms were bad, but they bundled them up with your good mortgage into a whole asset, and expected that you'd pay them enough and the foreclosed price would cover the rest to make them insanely profitable. And they made buckets of money for years doing this. We even had to pledge 700 billion dollars plus interest to keep this from totally collapsing our economy into great depression pt 2.

In getting you to focus on the people who borrowed against their means, the bankn is able to continue to bilk you on the premise that you are some how morally superior to those fools. Really you are just as big a chump as they are. In fact you are more so because at least those folks got the bank to take some of the loss for the banks bad poicies.
posted by humanfont at 12:23 AM on June 21, 2010

The bank's lethal jab of incompetence made it painfully clear that billions of dollars in bailout money apparently cannot be used to purchase a five-dollar calculator.
posted by Locobot at 1:19 AM on June 21, 2010

I refinanced my home in 2003, I had a fixed 30 year mortgage. The mortgage broker wanted me to take an ARM mortgage, I insisted on a fixed rate. I remember him saying I was being short sighted and foolish to sign a fixed rate mortgage. Thank goodness I stuck to my guns and insisted on the fixed rate.

That's just insane. I refinanced around then, and certainly nobody was encouraging this to me. And if they would have, I would have laughed at them. I'm no financial expert, but when rates are at or near historic lows, this means to me that they are far more likely to go up than go down.

Perhaps it was in his financial interest to do so? I mean, the bank knows that they're more likely to go up, too...
posted by RikiTikiTavi at 8:20 AM on June 21, 2010

With a 5% 30-year mortgage, a $270,000 house still costs $1450 a month. If you're bringing in less than $2200 a month, you cannot afford that much house, and even entertaining the possibility of buying more than twice as much house is flat-out absurd.

My tax dollars should not go to buying people houses that I can't even afford.
posted by one more dead town's last parade at 8:32 AM on June 21, 2010 [1 favorite]

With a 5% 30-year mortgage, a $270,000 house still costs $1450 a month. If you're bringing in less than $2200 a month, you cannot afford that much house, and even entertaining the possibility of buying more than twice as much house is flat-out absurd.

I was just thinking along these same lines. Adding $1000/year for insurance, and maybe 1% of the assessed value of the house forr property taxes, and the total payment is $1775. Call it 1776.

So 1776/2200 means you're spending 80% of your pre-tax income on housing. Even if the family's income has soared upward during the current recovery (?), and they're now making $3300/month, this means a front-end ratio of 54%, way above what is sustainable for any family. Assume that the family has any consumer debt, and the back-end ratio (total monthly fixed expenses divided by gross family income) has got to be pushing 60%.

Then god forbid that owning a house comes with maintenance expenses. Keeping the pool full and blue, fixing the things that the McMansion developer cut corners on, new dishwasher, whatever.

Essentially, they will never be able to afford this house, even at its current valuation. I don't see how they can build equity, unless that equity comes in the form of a grant or subsidy from the federal government. They are renters, they just don't know it yet. They can't even tread water without their fellow taxpayers' help.

The family committed fraud on their mortgage application and BofA was criminally negligent in lending to them, This never could have happened if the bank had to hold onto a major piece of every mortgage they originated.

- Kabong
posted by etherist at 10:09 AM on June 21, 2010 [1 favorite]

Big huge conglomerate banks are hell if you're a real estate paralegal.

I have a file where a mortgage discharge should have been filed back in 1996. It's my job to get in touch with the bank and get it to research its files and generate a new discharge.

Of course, the original bank has been bought and sold about twenty times over. The loan was never assigned a new loan number (why would it, it was paid off 14 years ago) so when you try to input the loan number into the automated system, it wouldn't acknowledge it - same with the social security number. After a few tries, the automated service just disconnected me - I was never given the opportunity to speak to a human.

If I am able to get a human, no one knows where to send me - I've been bounced around the whole bank. Each time I get a different phone number, which I eagerly write down hoping this will be the Holy Grail I seek - only to discover it's the phone number that disconnected me in the first place because I don't have an accurate loan number.

FINALLY, I ended up calling the "Hey! I'm a new customer and am interested in applying for a mortgage" and explained my case to the guy on the other line, who was able to input an access code that got me to a live, real, actual human, who gave me a fax number to send all the information to. It's been twelve days and I have not heard a word since.

Then, on another file (this happens fairly often), I sent all the proper paperwork to Bank A back on June 3. I was told by Bank A today that they had forwarded all the information to Bank B, so I call Bank B, only to learn that they had no documentation at all and could I please fax it to them directly?

My own mortgage is through a small local bank with four branches. I love them.
posted by Lucinda at 7:16 AM on June 22, 2010

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