Interesting. I was an expert witness in a class action lawsuit against Wells Fargo in 2004 to 2006. At that time WF stated they didn't offer Bi-Weekly Mortgages. The slithering snake changed these home owners' bi-weekly mortgages to traditional 30 year mortgages, breaching the written contracts. Better check your annual statement of principal balance and interest paid to insure WF is in fact treating your mortgages as accelerated pay off loans and not a traditional 30 year loan.
Here's the lawsuit incase anyone is interested:
"
I. Factual and Procedural Background
Plaintiffs are a group of homeowners who obtained 30 year adjustable rate mortgage loans from Parker Square Bank ("PSB"). When they obtained their mortgages, Plaintiffs elected to participate in a program offered by PSB that enabled them to make bi-weekly (instead of monthly) payments on their loans, effectively causing one extra payment to be made on the loans each year. As part of the program, Plaintiffs opened bank accounts at PSB, from which their bi-weekly loan payments were automatically paid. Plaintiffs "expected" that under this program they would pay off their mortgages in less than 20 years. Plaintiffs have provided no documentation by Defendant that the term of their loans was less than 20 years. Instead, they rely on their own expectation and the testimony of PSB's former loan officer Donnie Park ("Park") that the loans were set up as 30 year adjustable rate mortgages with bi-weekly payments and early payoff.
In 1999, the predecessor to Defendant Wells Fargo Home Mortgage purchased the assets of Parker Square Bank, including the Plaintiffs' mortgage notes. Between 1999 and 2000, Defendant reamortized each of the Plaintiffs' mortgage notes for the full 30 year term of the loans, maintaining the bi-weekly payments but lowering the amount of each payment. Plaintiffs allege that Defendant made this change "quietly" and never told them that the loans had been reamortized to the 30 year maturity dates reflected in their mortgage notes. Plaintiffs admit, however, that they received "ARM Change Letters" showing the remaining number of payments on the note. Each of these ARM Change Letters indicates that the number of payments remaining (assuming that Plaintiffs continued making 26 payments per year) would cause the loan to be fully paid off in 15-19 years.
Plaintiffs allege that they did not know of or consent to the change to their loans by Defendant. They assert claims for breach of contract, fraud, negligence, negligent misrepresentation, violations of the Texas Deceptive Trade Practices Act ("DTPA"), Tex. Bus. C. Code § 17.41,
et seq., violations of the Real Estate Settlement Procedures Act ("RESPA"),
12 U.S.C. § 2601,
et seq., violations of the Truth in Lending Act ("TILA"),
15 U.S.C. § 1601,
et seq., and intentional infliction of emotional distress. Defendant moves for summary judgment on all of Plaintiffs' claims."
Read Collier v. Wells Fargo Home Mortgage, Civil Action No. 7:04-CV-086-K, see flags on bad law, and search Casetext’s comprehensive legal database
casetext.com
The judge states " When they obtained their mortgages, Plaintiffs elected to participate in a program offered by PSB that enabled them to make bi-weekly (instead of monthly) payments on their loans, effectively causing one extra payment to be made on the loans each year. As part of the program, Plaintiffs opened bank accounts at PSB, from which their bi-weekly loan payments were automatically paid. Plaintiffs "expected" that under this program they would pay off their mortgages in less than 20 years."
This is so twisted and inaccurate. First of all, the plaintiffs did not "elect to participate in a program". Parker Square Bank was a locally owned bank in Wichita Falls, TX which was bought out or acquired by Norwest Corp in 1995:
"D. Federal Reserve Bank of
Minneapolis (James M. Lyon, Vice
President) 250 Marquette Avenue,
Minneapolis, Minnesota 55480:
1. Norwest Corporation, Minneapolis,
Minnesota; to acquire 100 percent of the
voting shares of United Texas Financial
Corporation, Wichita Falls, Texas, and
thereby indirectly acquire Parker Square
Bank, N.A., Wichita Falls, Texas, and
First State Bank, Archer City, Texas. "
Norwest was then acquired by Wells Fargo in 1998:
www.wsj.com
The plaintiff's attorney and I met with the former Parker Square Bank president, Dick Waggoner, and the former head of mortgage services, Donnie Parks, at the plaintiff's attorney's law offices. We were shown the brochure for the mortgages that these homeowners had obtained from the bank. The name of the mortgage was the "Interest Fighter Mortgage". So named because, as explained in the brochure, it was set up on bi-weekly payments equal to 1/2 of a regular monthly payment for a 30 year mortgage. Since there are 52 weeks in a year, there would be 26 bi-weekly payments each year, which are equal to 13 monthly payments.
So the way the contract was structured, the mortgages would pay off earlier than 30 years, some in about 25 years, and some in about 23 years, as I recall. It depended on when the contracts were originated and what the adjustable rates were for the mortgages. None of the mortgages paid off in less than 20 years, as the judge states. I ran amortization schedules for every one of them.
Why the judge did not understand that, I have no idea.
For over a decade, and some as long as 15 years, Parker Square Bank and then Norwest serviced the contracts according to what had been agreed upon between Parker Square Bank and the homeowners. They were serviced as accelerated pay-off loans, not 30 year loans. The verbal agreement, the written contract, and the behavior of the parties to the contract all manifested these were true Bi-Weekly accelerated pay off mortgages, until Wells Fargo acquired Norwest. WF unilaterally changed the contracts to traditional 30 year ARMs. They breached the contracts. These are the facts of the case.
The judge stated: "Plaintiffs have provided no documentation by Defendant that the term of their loans was less than 20 years. Instead, they rely on their own expectation and the testimony of PSB's former loan officer Donnie Park ("Park") that the loans were set up as 30 year adjustable rate mortgages with bi-weekly payments and early payoff."
Wrong. With each interest rate change the new bi-weekly payment was set as 1/2 of a monthly payment. This kept the integrity of making the equivalent of 13 monthly payments a year, paying the loans off early. This was manifested by Parker Square Bank and Norwest's servicing of these loans. In addition, the Brochure the plaintiffs were given prior to purchasing these loans documented how these loans worked, paying off the mortgage years earlier than a traditional 30 year ARM. Plus the testimony of Donnie Parks and Dick Waggoner confirmed that these loans were accelerated pay off loans. The judge is the one who has no documentation that these loans were traditional 30 year ARMs.
WF never sent a letter notifying the plaintiffs about the change in servicing. After a decade or more of proper servicing of the loans by Parker Square Bank, then Norwest, plus the verbal agreement between the original parties to the contract, plus the mortgage brochure, if I had purchased this loan I would just assume WF would continue to service the loans properly. And lay people, many anyway, don't understand what an "ARM change letter" is nor understand its contents. My barber for 35 years was one of the plaintiffs in this case. This is how I became involved, through discussion about Wells Fargo's servicing of his loan while he cut my hair. He is a smart guy but he was not aware WF had changed the servicing until 3 years and some months after the change had taken place.
The fact is as soon as the servicing of these contracts was changed the plaintiffs began suffering economic damages. Excessive interest was being charged by WF and paid by the plaintiffs with each bi-weekly payment after the change in servicing because the payments were lowered. It's just like a credit card payment. If the credit card company lowers the payments, more interest is charged against the outstanding principal balance (because the balance is larger than it would be with a larger required payment) and the period to pay off the balance is lengthened because of the lower required payment. So, more interest is charged, the length of the mortgage is longer (30 years), and equity in the property is decreased with each payment under the new servicing. In short, WF screwed these folks.
Word to the wise, look at your annual mortgage statements and insure the loans is being serviced as you think it is. If you don't know how to do this find a CPA and have him or her look over the servicing for you.
