Let the blowback begin.
A New York homeowner last week fought back against the denial of a mortgage modification by Wells Fargo — using as a cudgel in the bitter spat the bank’s admission just weeks earlier that a computer glitch wrongly denied hundreds of customers home loan help.
The move by Mia Derosa is the first known effort by a Wells Fargo customer to act on the bank’s Aug. 3 admission that its goof led to about 625 homeowners being denied mortgage relief.
Roughly 400 of those homeowners that were battling a foreclosure action between April 2010 and October 2015 eventually lost their homes because of Wells Fargo’s mistake, the bank said in a regulatory filing.
Derosa, who lives in Nyack, NY, about 30 miles north of Midtown Manhattan, took out a $650,000 “Pick-a-Pay” mortgage in February 2006 — and by 2011 was in financial trouble.
“Pick-a-Pay” mortgages were all the rage in the home-buying craze early in the aughts. They offered borrowers an extremely inexpensive route to home ownership by requiring them to make monthly payments of just some of the interest on the loan — and no principal.
The unpaid interest would be added to the principal.
The loans turned toxic when monthly payments would balloon past what the borrower could afford — creating a tsunami of defaults and foreclosures.
Derosa got a mortgage modification from Wells Fargo under the federal government’s HAMP program — but defaulted on it in 2016, the bank said. Subsequently, Wells reviewed four modification requests from Derosa — rejecting each of them, it said,
In each of the rejections — the last of which came in January — Wells cited Derosa’s insufficient income, according to court papers.
That’s not true, Linda Tirelli, Derosa’s lawyer, shot back.
Derosa has a “substantial, solid, steady income” of nearly $11,000 a month, according to court papers filed Aug. 16 by Tirelli.
Wells Fargo took advantage of Derosa, who tried in the past to navigate the complicated mortgage modification process without a lawyer, Tirelli said.
The bank has not been clear on the processes it used, and therefore Derosa cannot know if she was among those wrongly denied mortgage relief, according to Tirelli.
Tirelli said the bank’s estimate that only 625 customers were affected by the glitch is “laughable.”
“Clearly, this is a case of an honest but unfortunate Debtor who fell on a period of hardship but is now in a position to afford a modified mortgage loan and achieve a plan confirmation and ultimate discharge in the bankruptcy court,” the lawyer told a Bankruptcy Court judge ahead of a scheduled Sept. 12 hearing.
Wells Fargo said it has given Derosa ample reviews and that she simply doesn’t qualify.
The bank corrected the computer glitch in October 2015 so it wouldn’t have affected Derosa’s four modification reviews, all of which happened in 2016 or later, a Wells spokesperson said in a statement.
Plus, a state court found that the bank acted in good faith and that Derosa’s income is insufficient, the bank said in a court filing on Aug. 13 seeking to close the book on the fourth modification request.
Let the blowback begin.