Wells Fargo free mortgage modification? (insurance, loan, escrow, real estate)

[Tiger-eye]

I received a letter from a Wells Fargo mortgage rep saying I qualified for a free rate reduction in my mortgage. It said the offer would end in less than 7 days. I didn't call the number provided, but instead looked up the branch the letter originated from and called them. I asked to speak to the rep who sent the letter. He was able to look up my mortgage etc.
So no scam so far...

I'm just baffled though because there are no fees to reduce my rate (currently just above 5%).
There's no appraisal, attorney, or points - no fees. Just employment verification.

My principle balance will remain the same - just interest reduced.

The Wells Fargo rep said I was being offered this because they are offering it as part of the HARP program and b/c I've made all payments on time.

What could the catch be?

[ShanetheMortgageMan]

They are just being pro-active and offering you the new loan so you don't refinance elsewhere. You also may be in an area where values are falling so they are being pro-active now rather than waiting for you to be upside down and then trying to refinance then.

[mortimer]

There is an additional program out there where they will refinance a mortgage
even if the house is under water. It is another government program like HAMP
where the bank takes money from the government to process the paperwork.

The offer that I saw was about 1% above the going rate for those with
above-water mortgages and perfect credit. Your current rate - just above 5%
is likely to be better than their new offer.

It's good though since Well Fargo will make money by processing the paperwork
to give you an offer that is not as good as your current rate. That way they
can make more money and give themselves bonuses.

For those with some 8% subprime that is killing them, a reduction to 5.5%
could be a lifesaver. No fees ( to the borrower ), like a traditional refinance.

[Tiger-eye]

You also may be in an area where values are falling so they are being pro-active now rather than waiting for you to be upside down and then trying to refinance then.

That's what makes it weird though... the area is doing fairly well. I actually bought the home only a couple years ago - the market was pretty much near the bottom at that time in my area. I keep an eye on the real estate in my area and surrounding communities and it is actually decent.

Your current rate - just above 5%
is likely to be better than their new offer.

It's actually a decent rate that they offered me - only 0.125 more than the posted current rate. I'm actually making double payments on my 30 yr fixed and my mortgage debt to income ratio is very low... meaning annual income is pretty close to the balance on the mortgage.

Could it be that I'm being rewarded for my fiscal responsibility?

[frado]

We got this kind of letter (from a different bank) too.

Do you pay property taxes and insurance separate or is this included in your mortgage?

[Tiger-eye]

Originally Posted by frado

We got this kind of letter (from a different bank) too.

Do you pay property taxes and insurance separate or is this included in your mortgage?

I pay the property taxes and the insurance on my own. If I remember correctly, I had to pay something like $400 at closing in order for them to allow me to pay my own bills...
I did this because I'd heard of past stories where banks weren't paying people's taxes on time, etc. I just don't trust other people, companies, etc. to handle things properly that I know I can responsibly handle myself.

Why? Does this have something to do with it?

[frado]

We pay our property taxes and insurance on our own too.

I'm just afraid (because I called that phone number), that we will have an escrow account now. I know this sounds crazy, but I'm really worried.

[Tiger-eye]

Well, I asked and they told me nothing would change - i.e. no escrow account. You aren't committing to anything by just calling them. They will send you paperwork that you have to sign and have notarized if you agree to it. I've requested the paperwork... we'll see what it says when it comes.

[chipper21]

Originally Posted by ShanetheMortgageMan

They are just being pro-active and offering you the new loan so you don't refinance elsewhere.

^^THIS

If you notice, the 'new' lower rate they offer will be slightly higher than what you can expect with other lenders. No closing costs and higher rate with WF vs. closing costs and lower rate with non-WF. I just went through the process myself and it was straightforward.

[jonathanpaul]

Wells Fargo is offering under their Home Mortgage the reverse mortgage loan. A Reverse Mortgage loan allows senior homeowners to access their home equity and receive loan proceeds in a variety of different ways. Having spent years repaying your traditional mortgage, you can now tap into that investment to help you achieve your goals.

However you plan to use your equity — whether paying medical expenses, improving your home or just adding a bit of cushion to your monthly budget — you'll have a golden opportunity to put your investment to work for you.

Repayment is required if the borrowers no longer reside at the property, taxes and insurance on the property are not kept current, the property is not maintained to FHA standards, or other program requirements are not satisfied.