Cautionary Tale Regarding Wells Fargo
The Sarasota Herald Tribune recently published an article that stated that Wells Fargo had a short sale incentive/fast track program in place. The article, which is consistent with other published articles we have seen, suggested that Wells Fargo would be willing to fast track short sale approvals and even make payments to short sale sellers under certain circumstances to encourage sellers to participate. As you can imagine, we received a flurry of phone calls and did some digging.
We contacted Wells Fargo’s media department, and they confirmed that Wells Fargo does indeed have such a program. However, they could provide no details. We then had each of our five short sale team members independently contact several Wells Fargo negotiators regarding the article. In each case, the Wells Fargo negotiators denied any knowledge of such a program (and in one instance, did so after reviewing the article we supplied to them). Indeed, if Wells Fargo has such a program, it seems that none of the actual Wells Fargo short sale negotiators have actually been advised of the program.
Please keep this in mind when establishing expectations for short sale sellers who have Wells Fargo mortgages.
Wells Fargo Short Sale Addendum
As expected, Wells Fargo has followed suit with Bank of America and has put out a new Short Sale Affidavit (attached hereto). Similar to the agreements recently published by Bank of America, Wells Fargo appears to be getting more aggressive in trying to curb flips and low offers and is now requiring realtors and closing agents to join in the execution of the instrument.
The Affidavit contains traditional arms length language, but extends the traditional arm’s length representations to now include representations that there are no other or pending contracts. In fact, the Affidavit takes it one step further and forces the parties to agree that they do not even have knowledge of a higher offer for the property. This could be particularly troublesome, as it would seemingly eliminate opportunities to accept lower, but stronger offers.
The Affidavit also requires the Buyer to confirm, under penalty of perjury, that they will not sell the property within 90 days, and that they will not rent the property back to the Seller at any time after closing.
The Affidavit goes on to state that there could be civil and criminal (emphasis added) liability for any misrepresentation. Since all parties to the transaction, including realtors and closing agents, will be expected to sign this Affidavit, we again strongly encourage you to seek the advice of counsel before taking on a Wells Fargo short sale.
