Wells Fargo Absolutely Did Subprime, Stated, Interest Only, No Ratio Etc
Posted on October 3rd, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research
**NOTE – Mortgage/Real Estate professionals…feel free to share your experiences in the comments section below. Due to a consistent denial by Wells management, there is a belief that Wells was the safest out there through the bubble years and took very little risk. Tell us about your Wells deals…did they really do things so much safer than everyone else? From my experiences, they were one of the busiest and ‘best’ lenders out there during the bubble years, that’s for sure. But in the mortgage business ‘best’ means easiest and most risky. That like saying ‘she is a great appraiser’ – wink-wink.
The CEO of Wells was just on CNBC in a lengthy interview with Maria Bartaromo and he said “we never did stated income, low document, no document, interest only or subprime loans.” That is not accurate. I have covered Wells to death but here are a couple of documents I think the CEO might like to see. I don’t want to sound like I am coming down on Wells, but it is this type of deception that has turned a crisis of confidence into a full-blown global financial system meltdown.
The first page below is their portfolio intermediate-term ARM product guidelines from 2006 that were their top sellers from 2003-2007. Wells Fargo led the market in these. I believe they still have $75 billion in “Prime” first mortgages, including “Jumbo Prime” on their balance sheet of which much is likely this product type. However, with values down 40% to 70% across CA where Wells has the greatest exposure, these loan types are likely to perform much closer to Alt-A and Subprime vs. Prime, as they currently have them categorized.
Remember folks, throughout the bubble years Wells considered an ‘A’ paper or “Prime” loan to be a full-doc, 620 score, 95% combined loan to value, Jumbo 5/1 interest only with 50% debt to income ratios. This person could not get financing anywhere today or even six months ago. Much of this is on their best selling 5/1 interest only with initial 5-year rates at 4% to 5.5%.
The second page is their actual rate sheet highlighting the programs and rates as of Nov 2007…yes, they were still doing these then. They still considered these to their ‘Prime” program line. These hybrid ARMs will adjust over the next 5-years to 10-years.
These loans are also anything but “Prime” — especially with values down so much and still crashing. As a consumer with half of your income going out to pay a mortgage on a home that is worth half of its value from two-years ago and that you are upside down in by 35%, what is the fastest way to de-lever? Getting rid of the home and renting for half the price enables you to keep up your lifestyle and get your balance sheet back in line overnight.
On top of Wells $75bb in “Prime” loans they have $84 billion in second mortgages, much of which are also underwater and thereby unsecured given how much values are down. This is the same stuff Bernanke was saying was worth 5 cents on the dollar in his testimony the House a few weeks back.
Lastly, if I remember correctly they had $25B in subprime still, but don’t hold me to that…hey, maybe that is why they have $33 billion in Level 3 “assets” now. Nevertheless, the third rate sheet is from their Subprime division showing loans for those with as low as 500 credit score – doh!
At my research business, Field Check Group Real Estate & Finance, we track every single loan default, foreclosure, loss severity, etc and categorize them by lender, originator etc. I can assure you that Wells has its share of loan defaults. As a matter of fact, Wachovia’s CA originations are performing better at least in CA. If you are an investment fund looking for in-depth, granular research not available anywhere else, shoot me an email. Sorry guys, had to pay the bills.
Below is Wells Fargo ‘Prime’ ARM program guidelines from 2006. YES, they did Stated Income, interest only etc. See for yourself. VOA = Stated Income/Verification of Assets. SISA = Stated Income/Stated Assets.
Below is form Nov 2007, showing they were still doing these aggressive Stated Income, Interest Only, No Ratio etc when there was no market to sell them into. This means they most likely have this type of portfolio mortgage product on balance sheet.
Below is Wells Fargo’s SUBPRIME rate sheet from 2006 available mostly through their correspondent channel for years. It clearly shows they did loans with as low as 500 scores.
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October 3rd, 2008 4:21 pm
Wow Awesome job!
October 3rd, 2008 4:41 pm
Mr. Mortgage, Thank you for helping me to find the next stock to short (when the short ban is lifted).
October 3rd, 2008 5:04 pm
As a LO with Norwest (who bought Wells) and who stayed with Wells through the 90′s till 2007 I can assure you with confidence and documentation that Wells did No Ratio’s, Sub Prime, Alt A, “stated/stated”, and every other variance of no peek loans that the rest of the biz did. It’s a crock to say otherwise. My favorite product was a No Ratio Super Jumbo Line of Credit 1st TD loan at prime minus 1.0%. Im sure they regret the number of these loans I closed, not because of the credit quality, but because of the 4.25% ROI they now are getting!
My .02
October 3rd, 2008 5:08 pm
I asm pretty sure Wells had a sub prime operation in so Cal as late as 2006 when I as still in California. Yes, he is lying.
October 3rd, 2008 5:10 pm
They also changed there accounting practices a couple of months ago. no one is really looking into this. Is it a Warren Buffet thing?
October 3rd, 2008 5:29 pm
I cannot believe this absurd lie. Not only did Wells do SISA, NINA products, etc, they also run a finance company. How can he get away with this? We need to get ahold of someone at CNBC.
On separate note: Overnight LIBOR was bid-only today. What does this mean? Not literally ‘what does it mean’, but what does it mean for the credit markets?
October 3rd, 2008 5:37 pm
There changed there accounting practices to a Level 3 which I read in the August 14th, 2008
WSJ- Wells Fargo Cheated on Earnings Again. On Mr. Mortgage.
Why is no one exposing this.. Is this a Warren Buffet thing. It almost seems like Wells Fargo
has a hands off when it comes to the media.
It’s a Countrywide all over again.
October 3rd, 2008 6:00 pm
True!
I had many agents whose bread and butter was the Wells HELOC; this was before I closed my office in 2004 well before the peak of insanity. Requirements: Fax 1003 and submission form (approval in minutes).
$200k equity lines with a pulse.
October 3rd, 2008 6:34 pm
Holy shit, batman. This is huge. How can a CEO get away with lying like that?
Mr. Mortgage…..YOU ARE DA MAN! Great work. I bet Wells wil be first in line for the 700billion bailout screw the middle class bill.
October 3rd, 2008 6:41 pm
If you met the guy that did my WF Loan 4 years ago..
you would know this guy was BIG Trouble for the company.. Funny thing when I went to close the loan the Loan broker mysteriously was MIA and not handling the loan.. A lot of funny business was going on behind the scenes. No one would tell me Anything.
October 3rd, 2008 6:45 pm
I am completely cracking up that the Wells CEO would try and convince anyone of his statement. I was a loan originator and my number 1 product was an 80/20 I/O stated income loan by Wells Fargo. The CA areas these loans were originated in are among the current leaders in delinquincies and foreclosures. I don’t know how Wells has been capable of hiding this so far but sooner or lady the fat lady is going to sing on this so prestige institution. Bottom line, he is full of s#*@….
October 3rd, 2008 6:51 pm
Until “FRAUDS” like Richard Kovacevich are exposed, they will continue to lie and steal.
1. In Arizona Wells Fargo created the “emerging market” loan for illegal immigrants. Work Visa was ok and no source of funds was needed (cash under the mattress)and no voe. HELLO RICHIE…..that isn’t “A” paper!
2. Wells is trying to take over Wachovia so it can take the 60B of bad debt and sell it to the Govt., since bill passed.
What a bunch of creeps! Please expose these ^#%@$!
FYI….my buddy is pulling $750K from their private banking account Monday!
Wells Fargo will be #289
October 3rd, 2008 6:56 pm
Anyone in the mortgage business in the last 5 years knows that Wells Fargo did subprime and stated loans just like everyone else. Wells was one of the few companies that would allow stated on retired (fixed income) borrowers. The borrower just needed to write a letter saying what their income was from retirement.
October 3rd, 2008 7:13 pm
I am completely cracking up that the Wells CEO would try and convince anyone of his statement. I was a loan originator and my number 1 product was an 80/20 I/O stated income loan by Wells Fargo. The CA areas these loans were originated in are among the current leaders in delinquincies and foreclosures. I don’t know how Wells has been capable of hiding this so far but sooner or lady the fat lady is going to sing on this so prestige institution. Bottom line, he is flat out lying……
October 3rd, 2008 7:26 pm
not to mention the 700 fico SISA to 100% piggy back 2nd that were orginated by Wells wholesale and purchased bundled from now imploded wholesalers by Wells.
October 3rd, 2008 8:24 pm
I worked in the Des Moines subprime division from 2004-2007. I quit because the loans I was working on made me sick to my stomach, and although I had missed the first and second rounds of layoffs, I knew we would shut down sooner or later (they shut down soon after I left). I worked on the ops side of things and it seemed that all a LO had to do was scream loud enough and the conditions the underwriter set would disappear… amazing! Wells Fargo is NOT a saint and had a hand in creating this mess. No job? No bank accounts? NO problem!!! 620+… we’ll do it! 2 yr. ARM w/ 2 year prepay.
October 3rd, 2008 8:32 pm
Why did you wait so long to expose them? They were hiding from the buyout of other banks, so their bad portfolio would.nt be scrutinized. They hold the paper on a bunch of the subprime lenders. Every time I see a foreclosure notice, it list Wells Fargo’s name, even when they didn’t originate the loan. This should have come out last week. Warren Buffet just brought America.
October 3rd, 2008 8:36 pm
I got a wells 80/20 heloc interest only in august of 07. Got a bogus appraisal from them to qualify us, Broker screwed up and we ended up with 2 brokers at closing…… really weird. Wish it never would have happened. We are now 200k in the red.
October 3rd, 2008 9:09 pm
Wells Fargo also did a bunch of business with new homebuilders – i.e.: foreclosure central. Just look at their 10Q from the “boom years” to see all of the subsidiaries or a simple google search with a few key words. I imagine it went something like this: they would go into smaller and mid-sized builders, the builer would open a “builder mortgage company” (COUGH – shell) and Wells would provide something (COUGH – CFL license and perks of having exposure to their loan product portfolio, which included broker agreements with other banks, technology, etc. In turn, they would be paid on each loan whether they funded or brokered the loan out to someone else- COUGH, COUGH – Countrywide. …. It’s quite an interesting set up if anyone wants to look into it. I imagine they managed to mitigate a bunch of risk by brokering the “risky” loans out this way – COUGH, COUGH, COUGH – America’s Wholesale Lender. It would be interesting to figure out the default rate of any loan the Wells had their hands on in some way or another – funded or brokered out.
October 3rd, 2008 9:15 pm
Point in post above… Maybe the CEO was thinking of this when he said they didn’t do subprime, stated, NINI, etc. He just “forgot” about all the exoctic loan programs that THEY DID OFFER! Maybe he will clarify his statement – NOT!
October 3rd, 2008 9:18 pm
http://www.google.com/search?hl=en&q=%22jts+financial%22+and+%22wells+fargo%22+and+%22subsidiary%22
October 3rd, 2008 9:54 pm
Why do you hate America?
October 3rd, 2008 10:37 pm
I don’t…I hate liars.
October 3rd, 2008 10:40 pm
The video interview:
http://www.cnbc.com/id/15840232?video=876933548
October 3rd, 2008 11:12 pm
Hey, Lets back up here. We know what countrywide said and did and what the results were. Now, if it is proven that this guy, CEO of Wells, is lying and they are in the near future proven different,go down, couldn’t this be construed as a fraud or deceit to the stockholders and american public. This lie is just why we had to borrow 700 b. I know of wells personally with their trust and real estate department. They were not good folks.
Thanks MM for all you have done here.
October 3rd, 2008 11:41 pm
I made great money from puts on Lehman thanks 100% to Mr. Mortgage. Wells has my attention now – lots of meat on that bone. (working on NLY too) You rock Mr. Mortgage – Thanks!
October 3rd, 2008 11:58 pm
In Enron, they were only charged with false statements in 10K & 10Q filings with the SEC, and false statements made to banks.
I am sure they went on CNBC and made false statements but they were not charged for that.
October 4th, 2008 12:11 am
WFC management are outright liars. AND, they’re giggling at the shorts, today anyway. It’s un-**cking believable.
Guy down the street from me in Boston got a $1 million mortgage at 6.5% (on a $1.3 million house) from Wells, over the phone, in less than an hour. House is down to $1 million in value now, a year later. I just don’t know how any bank can give $1 million dollar loans to a guy who’s a wage slave like the rest of us. Few among us are guaranteed to make 250k+ in income FOR THE NEXT 30 YEARS.
Where’s Wachovia’s exposure? I know they have that $20-$40 billion problem from GoldenWest Financial, but where is their other mortgage exposure? In areas like New England and NYC that haven’t really gone down yet? Wachovia has to have a lot of exposure in Charlotte for crying out loud. Prices there have barely downticked.
Wells is going to get hammered, one day. I just hope I can hold my short until then. Can we find a single Congressman to stand up and demand that banks oinking out of the public trough should at least suspend their dividends?
October 4th, 2008 1:02 am
These bankers run Washington, as well as Ben, Hank & Co. so don’t look for any honesty at ANY level. How did you guys like the “good cop bad cop” routine they pulled to get the 700 Billion. “We really don’t want to take your hard earned money…but if we don’t you will die, the sky will fall, and the sun won’t shine.” When is America going to wake up and do somthing about this stuff? I live and walk amongst IDIOTS. The above poster is dead on about the Well exposure to “Cough”…builders, helocs, and the like. Wells was exposed by Mr. Mtg on their level 3 “assets” some time ago. Just wait till all that crap hits the balance sheet. This is getting uglier by the day.
October 4th, 2008 1:11 am
Mr. Mortgage, you have been absolutely uncanny with your reporting and predictions. It is indeed true that WFC has/had a strong presence in subprime. My aunt was the head processor at the Little Rock office. She would tell us the stories about the clowns who came in and applied for mortgages and would get them just because they could fog a mirror. I am currently short WFC at around 34.50 – didn’t gat shaken out (only had a small position before the ban took place). WFC is right now what Goldman Sachs was this time last year, a paper tiger.
October 4th, 2008 1:35 am
If the regulations were enforced, this crap could not happen, so lets place the blame squarely where it belongs. This should not be earth shattering news to anyone. Many of these banks (not just WFC) and the officials in charge have lied all along. They have lied and misled stockholders, Congress and the general public alike regarding there loan types, assets /accounting, who knows what else. The outrage here is that the so called watch dogs… the SEC has not investigated or charged any of this scum with criminal offenses. Chris Cox is a sad joke and should have his ass fired. His job is to defend and protect against this type of bullshit and that makes him a total disgrace and in my eyes a total failure or better yet traitor, as he consistantly has turned a blind eye to all of these shinanigans. One can only summize that he is in the pockets of the Wall St. bankers.
You can add Paulson and Big Ben to that list as well.
October 4th, 2008 1:40 am
My best friend worked for a couple of years for Wells–what a bunch of liars! They did every kind of risky stated income/no doc type of loan you can imagine and were well known for not requiring any documentation on those loans. Management told the underwriters not to question unbelievable stated income. They were strongly discouraged from questioning income or checking facts, and got in trouble when they didn’t approve the loans as they were submitted. Of course it was rarely put in writing, so Wells looked good on paper—they had a guideline saying one thing and managers saying the opposite. Several underwriters tried to warn the Wells fraud department but no one would listen. They did not want anyone to stop the gravy train for their loan officers who made hundreds of thousands of dollars in the last few years. It was insane. Coincidentally most of those honest underwriters were laid off and those that went along with the corruption were kept and promoted. The rest were too afraid to speak up.
Then they blackmailed the employees they laid off: if they didn’t sign a release to swear they would never talk about Wells to anyone, and swear they would never bring a lawsuit against Wells, then they would not get any severance pay at all. That is why those people don’t talk, they can’t!
Glad this is finally coming out. We have been waiting for the other shoe to drop for years…hope someone investigates them now.
October 4th, 2008 3:03 am
This guy is full of crap. It’s just a matter of time before Wells Fargo’s funny accounting practices get exposed. I don’t know how they’ve kept the ruse up for so long, but the fact that they keep the servicing for their most subprime loans under America’s Servicing Co. has always made me suspicious… I negotiate a lot of short sales and Wells Fargo/ASC has raised the bar for unprofessional negotiators and supervisors every time. It’s like they get paid more for NOT trying to mitigate the loss for their investors.
Brokers had to give back YSP if a loan was repaid or defaulted within a certain timeframe, and that makes sense. Why don’t executives have to give back their salaries if their investments fail?
October 4th, 2008 4:04 am
He (Wells CEO). is a major liar because we could do Direct Express and if we go an approve/eligible with the WF underwriting engine it was no income no asset most of the time. What a crock… he is TOTALLY full of it! I have a rate sheet dated 1/23/2008 with “Wells Fargo Mortgage Express – Stated Income/Stated Asset – Section 505″ (their verbiage not mine) on page 1 mid way down the page AND Page 2 Non Confroming (same date 1/23/2008) VOA Stated Income adds on the bottom of the page to the right and I/O add for FIX and I/O add for ARM on the left side of the page. I would be HAPPY to post it if there were a place to do so let me know I’m staring at it as I type. THIS is exactly one of the reasons why we are in the position we are in… because of deceptive lenders!
Let me know where or who to get the rate sheet to and I’ll post if for all to see. (Loyal reader Mr. Mortage) L. Melby
LM
October 4th, 2008 7:14 am
I like to make things as simple as possible. If CNBC’s Maria Bartaromo is interviewing anyone related to this financial crisis, THEY ARE DIRTY!!
October 4th, 2008 7:25 am
I saw that interview, and I may be wrong, but I think he said ON subprime loans, not OR subprime loans. Makes a big difference.
“we never did stated income, low document, no document, interest only (OR/ON) subprime loans.”
October 4th, 2008 8:14 am
Mr. Mortgage:
If Wells has $184bb exposure to “Prime” loans, second mortgages, and subprime, what exactly does that mean? With respects to a WAMU, how does it compare?
Is Wells on the ‘to big to fail’ list?
October 4th, 2008 8:20 am
I dealt with Wells Fargo first hand, I was a victim of mortgage fraud and guess who gave the me the loan. A shady mortgage broker used my name and took out two loans on a property for more then $600,000. I didn’t even know until they started calling me looking for missed payments. They came after me with know regard. At the time when the loans were originally given, I was 25, unemployeed, and with little to no money. It took me almost two years to get to the bottom of what had happened. The property was recently resold for $250,000. The shady mortgage broker is still out there as far as I know. I have complained to the division of banks, the attorney general, and better business bureau with little action. Myt credit is still affected by this and am working to remove them now. I was not subprime, I was alt-a, my credit score was 754, now its 575. From dealing with this first hand, I have come across a lot of people in a very similar situation. All it took was a crooked mortgage broker and crooked appraiser and you could create your market value.
October 4th, 2008 9:03 am
I am sending a link to this story to my representatives and I urge everyone else to do the same!!! Please do this.
October 4th, 2008 10:21 am
Yes, yes, and YES to all. I worked for Wells Subprime up here in the Northeast (New Hampshire) and a high percentage of my sourced realtor purchase loans and referrals for Purchase and refinance loans from Prime reps (who couldn’t do subprime) were NINA, SIVA, SISA, Stated, Interest only! 580 mid score rewarded customers with 100% financing (80/20′s). EVERYONE did these!!!! I still have some of my shadow files showing Wells Fargo’s documentation with rate sheets and product guidelines. WOW!
October 4th, 2008 12:14 pm
I didn’t see the interview so I have to ask, did he say they never did this stuff or never invested in it?
Don’t mean to parse words, but alot of banks made loans they’d never put on their own balance sheet. The loans originated to be dumped on Wall Street had virtually no standards. If you could sell it, you could originate it.
Wall Street earned an “F” as credit administrator.
October 4th, 2008 12:15 pm
MrMortgage, you left out the EFA or Expanded Financing Alternative (ALT-A), which is the No Doc , No Ratio you’re refering too. But, every item you listed was sold on secondary market long ago. Doesn’t that make it “toxic” to someone else ? Example -ALT-A sold to AURORA aka LEHMAN Brothers.
I look forward to you comments.
The entire 1003 must be completed except as noted below:
Full Doc – Income, source of income and assets must
be disclosed on the application and verified with pay
stubs/tax returns and verification of documentation.
Verbal verification of employment is required.
Stated – Income, source of income and assets must be
disclosed on the application. Verbal verification of
employment is required. Non self-employed borrowers
are not eligible on Alt-A Minus.
Stated with VOA Option – Income, source of income
and assets must be disclosed on the application.
Assets must be documented and verified. Verbal
verification of employment is required.
Non self-employed borrowers are not eligible on Alt-A
Minus.
No Ratio – Source of income and assets must be
disclosed on the application. The amount of income is
not disclosed. Verbal verification of employment is
required. Non self-employed borrowers are not eligible
on Alt-A Minus.
No Ratio with VOA Option – Source of income and
assets must be disclosed on the application. The
amount of income is not disclosed. Assets must be
documented and verified. Verbal verification of
employment is required. Non self-employed borrowers
are not eligible on Alt-A Minus.
No Doc – (Alt-A Prime Only). Income, source of income
and assets are NOT disclosed on the application. If
income or assets are disclosed on any other documents
including the application, bank statement(s), or pay
stubs and included in the file the loan is ineligible.
Verbal verification of employment is NOT allowed.
October 4th, 2008 12:28 pm
Yes, they did sell a lot. But what banks have remaining on balance sheet are the portfolio products of which they originated the most. For example, IMB and WM had POA, HELOCs and Subprime. WB had POA and HELOC. WFC has $75bb in ‘Prime’ first mortgage liens. These are NOT Fannie/Freddie. These are their portfolio hybrid int med ARMs most likely. I address it in the post. Also remember that what was ‘Prime’ at origination 2 years ago when prices were at their peak, lower scores and higher CLTV’s were allowed with 50% debt to income ratios, are not really prime loans any longer. They also have $84bb in Second Mortgages as they were on of the largest originators.
“The first page below is their portfolio intermediate-term ARM products that were their top sellers from 2003-2007. Wells Fargo led the market in these. I believe they still have $75 billion in “Prime” first mortgages, including “Jumbo Prime” on their balance sheet of which much is likely this product type. With values down 40% to 70% across CA where Wells has the greatest exposure, these loan types are likely to perform much closer to Alt-A and Subprime vs. Prime, as they currently have them categorized.”
October 4th, 2008 12:42 pm
I can’t think of more difficult shorts now than major commercial banks directly feeding on a nearly one trillon dollar government teat. You can be destroyed waiting for the natural justice to assert itself as it one day will. In the meantime, good and honest companies will probably make much better shorts. I know–it’s perverse.
October 4th, 2008 1:36 pm
Amazing how they are able to straight face it on national TV. We saw it with Mozillo, and now with Wells Fargo.
Why not send this directly to Maria? Perhaps she’ll do a follow-up… perhaps not.
I know they did subprime for YEARS. They pushed it harder than most.
October 4th, 2008 1:50 pm
A year and a half ago, I wrote on the ticker forum of the Alt A, Neg am, and suprime exposure of CFC, Wamu and WFC.
Though, a Wells is so much larger they held the amounts of the previous deceased.
I made some decent cash on many banks and home boomers is 2007, put playing, but wells fuka has maintain a top stock price, thus kicking me, to no end.
They go up a buck and a half, and their puts, med term, change minimally.
Once a week, I check wfc and other doomed homebuilders and look for put plays. Sorry all, they are too expensive and if the merger by shotgun plays continue, then you will most likely be killed.
IT does pay to be an insider.
Great blog hedge, I just wish we could do more to survive with it.
October 4th, 2008 2:13 pm
“what banks have remaining on balance sheet are the portfolio products of which they originated the most”
That seems like a pretty big assumption.
Banks built their loan portfolios over a number of years. If they were thoughtful, they didn’t sell indiscriminately, and cherry-picked high quality assets for their own balance sheet.
I don’t know if Wells Fargo kept their wits about them or not, but there was a sane way for balance-sheet lenders to navigate the last couple of years. Time will tell.
JMO
October 4th, 2008 2:21 pm
Yes, Wells did SISA loans…plus they have right now over 30 loans that are on the Notice of Trusee Sale just for Orange County, Ca. And I believe another 37 on the list under a dba of Americas Servicing Co…so that totals to 67 single family homes going on the sale block just this week…This type of information is public knowledge but no one seems to notice.
It is a sad, sad, time for home owners that got sucked up into this buying scam that over took the nation. I have been in the mortgage industry for over 30 years and have NEVER seen it like this.
October 4th, 2008 3:24 pm
There seems to be a strong correlation between the time when a financial company’s CEO lies huge publically, and then the place tanks. I think it’s about 3 months or so. So that would put WFC at about the December time frame for some kind of debacle. Any comments?
October 4th, 2008 3:35 pm
Arms from 2003 – 2007 ? Those have to be long gone by now in secondary market.
October 4th, 2008 6:56 pm
I was a Wells Retail Subprime mortgage originator for over 3 years. Made a ton of $$. What the public doesn’t know, is that Mortgage Consultants used to “modify” loan packages sent to Underwriting. Because we sent the actual hard file with credit reports, etc. They used white out and modified low credit scores to make borrowers qualify. Until they got smart, and started using Adobe Professional. The underwriters comment, “If the loan package looks legit, then we don’t care.” These people were caught eventually, and just fired. No prosecution, just fired. But Wells Fargo Home Mortgage funded thousands of loans shrouded in fraud.
October 5th, 2008 5:15 am
Awesome documents. I hate dishonest companies.
October 5th, 2008 8:51 am
Alright, someone enlighten me to why hr block hasn’t taken a dirt nap yet…They were wallpapering money all over the country. In some ways they were actually worse than countrywide. As for Toll brothers. Evertime that guy comes on t.v. i enter a short position, works like clockwork. The sad thing about this whole mess, is now solid companies, that acutally create REAL products are getting blistered on a daily basis and alot of the companies who profitted from this collapse are either not moving or going up….sad irony to the whole f-in mess.
October 5th, 2008 9:44 am
Dont even get me going on HR Block. In my opinion they have more pain than anyone yet coming. From 2003-2008 they did $128bb in subprime. Yes they sold as quickly as they could originate but when the subprime secondary market blew up in Nov 2006 through Aug 2007 when they quit doing subprime they originated some $18bb in subprime that if sold would have resulted in major losses. None have been reported. This means they are either a) lying b) are using their off balance sheet trusts to hide this stuff. In addition, the blow back from subprime onto originators has been extreme especially over the last 6 months. The whole loan, MBS investors and mortgage and bond insurers want their money back. They never signed up for what they got. HRB has pain coming for sure. How they have been able to skate so far is beyond me.
October 5th, 2008 9:05 pm
we did a lot of buz with Steve Summer out of New Orleans.
We closed a TON of subprimes with Wells.
It is a good idea to note that Jack Welch of GE was on CNBC the other morning and he was ripping sub prime.
I emailed Joe Kernon and told him we closed a ton of loans with WMC – th GE subprime lender and ask Welch
about it.
Kernon responded to me in an email but never asked Welch,
his former boss.
October 6th, 2008 1:24 am
I remeber my friend who used to work for Wells told me those stated programs that Wells were doing.
Straight to Close (system selected SISA), Quick Close, Minimal Document 5 (SISA), Minimal Document 4 (SIVA), Minimal Doc 3 (VISA), Mortgage Express (borrower select SISA), etc.
October 6th, 2008 11:12 am
Mr Mortgage,
I know someone that can get to Maria with this information. I’ve put that process in motion this morning.
October 6th, 2008 5:07 pm
Maybe there is another answer…
Don’t confuse ignorance for lying.
Given how things have gotten so perverse it is not improbable
that this CEO just doesn’t know what his company is/has done.
Don’t get me wrong, not making excuses but he wouldn’t be the first.
October 7th, 2008 2:06 pm
Mr. Mortgage – YOU ARE WRONG and MISQUOTING
**************************************************
You are misquoting Wells Fargo’s CEO. All – go to cnbc.com and read the interview. http://www.cnbc.com/id/27056569/
Here is what Dick K. said:
“WE DID NOT MAKE ANY NO DOC, LOW DOC, OPTION ARMS., NEGATIVE AMORTIZATION LOANS, FADED INCOME, TEASER RATE ARMS THROUGH SUBPRIME BORROWERS.”
Wells Fargo never did option arms or neg. am loans. It’s a fact. Please check your resources Mr. Mortgage
October 7th, 2008 2:10 pm
In the quote above (taken from the transcript of Maria’s interview) no doc and low doc were adjectives describing types of option arms and neg am loans… he could have just as easily have left those describing terms out because Wells Fargo did NOT offer option arms or neg am loans period. I’m very disappoited in Mr. Mortgage and will not trust any of his information from here on out.
October 7th, 2008 11:38 pm
I work at Wells Fargo and I can tell you that you are all working yourself up into a frenzy over issues and concerns that your don’t fully understand. Here are the facts. 1) We lost enormous market share to our competitors (CFC, WM, WB, Indy, NCC, even BAC) in 2005 and 2006. As a company we made a strategic decision in late 06 to develop new products including some of the risky products that are described above. We did create products that could be classified as subprime and Alt A. You even have documents that show the proof. The problem though with the arguments above is that we were horrible at being competitive in this space. So yes, we did offer subprime loans…and yes we did offer some reduced documentation Alt A fixed and hybrid arm products. But…we didn’t originate very many of them. In fact you should look at your price sheets above and you’ll see that if you compared our price for those products to WAMU or CFC price sheets during the same time period, our prices for those loans were significantly below that of our competitors. So the bottom line is yes we did offer these products but because this was not a strong area for us we struggled and didn’t do much business.
Furthermore, of the few loans we did originate, most of those risks were packaged in securities and the risk was sold.
So what about the loans we did originate, believe it or not and fortunately for the security holders out there, the default performance for our retail originated products even to this date are 2 to 3 times better (less delinquent) than subprime and Alt A paper from those guilty parties that are now facing extinction.
Another fact, we did not offer Option Arm (Neg Am) loans ever. The top management of the bank were strongly against this product. Many at the mortgage company thought it was necessary for competitive purposes, but in the end the product was never created or offered. I say created because if you do research, you will learn that Wells Fargo does not have any capability to service these loans for customers. Call it high standards, or call it a smart business decision to not invest in infrastructure to service negative amortization products….whatever you call it the fact remains that WFC never originated a single pay option arm.
In summary, I’ll say that Wells Fargo is not perfect but I am proud to work at this company. I do believe that they have higher credit standards, stronger principles, and are highly ethical compared to many of the banks that survive today.
I would not bet against this company. You should have every right to do so but I promise you from where I sit in this organization, Wells will be extremely successful in the future.
Good luck to everyone and let’s all hope that we see a better and stronger economy realy soon.
October 8th, 2008 9:47 am
This was posted on a different forum meant for Wells from Michael Bloomquist. Thanks Mike. I agree totally.
“WELL, I WOULD ARGUE THAT ONE OF THE FEW INSTITUTIONS THAT DID NOT DO THE THINGS THAT OTHERS DID DURING THE EUPHORIC TIMES WAS WELLS FARGO WHICH I THINK WAS WELL DOCUMENTED BY ANALYSTS AND SO FORTH. WE DID NOT MAKE ANY NO DOC, LOW DOC, OPTION ARMS., NEGATIVE AMORTIZATION LOANS, FADED INCOME, TEASER RATE ARMS THROUGH SUBPRIME BORROWERS. NONE. WE LOST 4% MARKET SHARE AND ABOUT $160 BILLION IN ORIGINATIONS IN 2006 ALONE BECAUSE WE DIDN’T DO THAT AND WE’RE THE BENEFICIARIES OF THAT TODAY. I CANNOT IMAGINE WHY THIS HAPPENED OR HOW THIS HAPPENED. IT SHOULD NOT HAVE HAPPENED. IF I HAD TO PICK ONE WORD, I’D PICK GREED.”
Regardless of what Kovacevich meant to say or our interpretation specifically on option ARMs with Stated income guidelines; he clearly indicated that Wells was an exception. ALL here AGREE that the general state of Wells being an exception was a complete lie.
Do you work at Wells?”
October 8th, 2008 11:17 am
Stephen, with all due respect WFC was the top player. You lost no market share. You owned the CA, AZ, NV and FL intermediate-term ARM and Second mortgage sectors. You can go here and see you were a top 3 jumbo lender int he nation for many years running. http://www.nationalmortgagenews.com/freedata/?what=jumorig
You were also a top home equity lender for years shown here. http://www.nationalmortgagenews.com/freedata/?what=secorig
Total mortgage assets in relation to total assets is enormous compared to your peer banks. You have $84bb in seconds, $75bb in jumbo prime and $25bb in subprime against an asset base of $475bb. Even WB only has $150bb total resi assets against $675bb asset base.
You did not to Pay Options granted. But 95% CLTV Jumbo Prime interest only with 50 debt to income ratios on borrowers with 620 score is a subprime loan even though you categorize it as Prime. Other than the $84bb in seconds, most of the $75bb Wells mainly holds is 5 through 10-yr paper as well as 30-yr fixed product, mostly Jumbo.
I don’t have it wrong. WFC is very exposed to the riskiest markets with the riskiest types of loans.
October 9th, 2008 1:06 pm
Stephen,
Well said! You have the facts and I completely agree with you that Wells Fargo will be even more successful in the future due to their past and continued high standards. I’m a huge fan of the company in general – smart smart business…
Mr. Mortgage (admin),
You don’t read with a great deal of understanding or you just retain what you chooose… Stephen mentioned very specific years…
I respect your site but I don’t like the way you “bad mouth” certain companies repeatedly.
October 9th, 2008 2:13 pm
I don’t bad mouth unless they lie. Period. I am not the aggressor.
You will see. If the Treasury starts injecting capital vs buying distressed assets, you will see Wells get honest really quickly to get their piece of the pie. $1 injected turns into $12 in loans.
You will see this long drawn out period of write downs/capital raises continue for several years.
October 13th, 2008 12:17 am
[...] Wells Fargo Absolutely Did Subprime, Stated, Interest Only, No Ratio Etc (63) Posted on October 3, 2008 3:59 PM [...]
October 15th, 2008 9:11 pm
Mr. Mortgage,
Nice work. The evidence does seem to suggest some latitude with the ‘truth’ on the part of Wells.
To rebut Stephen conclusively, it would be good to have National Mortgage News rankings for 2005 and 2006 as well. Nevertheless it is noteworthy that in Q1/Q2 2007, Wells was a leading originator by far of Jumbo Residential loans.
October 16th, 2008 10:49 am
Wells Fargo did subprime lending and even had a division called MORE that did the BCD lending. This is ALL very true. But, Wells NEVER went to the extremes that Countywide did…..
I have worked for both companies. The lending practices of Wells Fargo were much more strict. EVERY bank wrote alt a and subprime loans within the last 5 years. Wall Street and Clinton Administration wanted these loans as they were very profitable and important for first time home buyers/emerging markets.
Mr. Mortgage has a HARD on for Wells…and that is fine. Wells Fargo is going to be around a lot longer than some tool box named Mr. Mortgage. The Big Red Machine continues to grow and prosper even in this enviornment….
JOEBLOW
October 16th, 2008 12:14 pm
Hello
I’d like to speak to any mortgage broker or better yet, Wells Fargo executive (past or present) regarding SI/SA no source/no seasoning loans. I’m involved in a prediciment now were Wells Fargo is claiming to be a “victim lender” and has denied these programs exist despite evidence they did.
Any help is appreciated. I look forward to speaking with you on this.
October 22nd, 2008 12:38 pm
The Reduced-Paperwork loan is alive and well at wells. I found this on their website this morning!!! They are also offering bank statements to qualify self employed and w2 borrowers. This is the kind of stuff New Century and argent used to do.
Wells Fargo Mortgage ExpressSM
Learn More
866-304-8075
If you’re a self-employed homebuyer with a steady income, consider convenient, streamlined home financing with Wells Fargo Mortgage Express, our reduced-paperwork option1.
Wells Fargo Mortgage Express provides the following benefits to eligible borrowers:
* Convenience. There’s no need to hunt for tax returns, bank statements or pay stubs. Simply state your income and assets on your application.
* Speed. Your application won’t be delayed by paperwork and we’re usually able to provide an immediate decision.
* Simplicity. You’ll be in your home faster with a reduced paperwork process.
* Flexibility. Use this option in combination with a wide range of fixed- and adjustable-rate mortgage products for buying a residence or a vacation home.
Recommended for:
* Self-employed homebuyers with good credit
For more details, please discuss your home financing needs with a Wells Fargo Home Mortgage consultant.
Spend your time shopping for a home, not applying for financing!
November 4th, 2008 12:57 pm
[...] Other than Chase, which I find interesting, one of the most interesting aspects of this chart is how Wells Fargo’s originated loans are performing worse than Wachovia’s. This is because the Pay Option ARM implosion (Wach specialized in Pay Options) has not hit in earnest while Wells Fargo’s more Alt-A style lending (5-year, interest only, high-CLTV, stated income) is already seeing default damage. The same goes for their percentage of overall loan defaults as depicted in figure two below. Last month I posted a lot of info on Wells Fargo – Click HERE for story. [...]