Today I had the privilege of attending a local Wells Fargo short sale seminar in my area (Rancho Cucamonga, CA).Â The presenter was Abel Fregoso, who is the Regional Vice President of REO and Short Sales for Wells Fargo.Â He has 25+ years in the mortgage industry and is a pleasure to listen to.Â I will post my actual notes, and then I'll expound towards the end of the post.
My notes:Wells Fargo short sale meeting 9/23/10
Wells Fargo services 9 million loan customers (2nd to BofA)
22% are portfolio assets including Wachovia loans (or owned by Wells Fargo)
Therefore, 78% are serviced for loan investors (where Wells is the servicer)
Wachovia assets have already been written down (default management term, means losses have been realized)
With Wells, the loss hasn't been realized yet (therefore, not as loose as Wachovia program, more at stake to lose for the investor)
"2010 is the year of liquidation, 2009 was the year of retention" (good quote)
"The pig in the python" ( default management term ) - backlog inventory clogging up industry, but it has to move through some time...and that some time is very soon!
Severity is the percent of the loss realized on an asset
Wells averages: 55% severity on REO, 38% on short sale (interesting)
FHA starting to see more delinquencies - they will treat short sale same as REO onÂ Â borrowers credit (bad news)
Half of the Wells investors require 60 day delinquency before short sale
Estimated 60% of the loans serviced by Wells are GSE owned (Fannie / Freddie)
Some Wells proprietary short sales may offer borrower $5,000 (non-HAFA)
Every Wells short sale will go through a HAFA program underwriting process
Wells will be accountable to the Treasury for HAFA success (low is bad for them)
When asked why Wachovia and Wells portfolio won't postpone foreclosures, Abel said, "it is time to flush the toilet" (nice)
866-903-1053 Wells homeowner short sale hotline-customer friendly
866-969-0103 Wells submission fax number
I learned some important things at this event.Â I did not know that all Wells short sales will go through the HAFA underwriting process to pluck out HAFA eligible deals.Â That is encouraging.Â Also, Abel shed some light from an upper level management perspective on short sales from the investors perspective.Â The consensus is that private loan investors want the most bang for their buck, which may include requiring cash contributions and promissory notes from borrowers.Â Abel agreed that junior/subordinate liens may take a while to warm up to the idea of cooperating with the HAFA program guidelines.
Hats off to Wells Fargo for being proactive with streamlining the process on their own portfolio loan short sales.Â A minimal doc, streamlined process with substantial incentives to the borrower (up to $5,000 and waiving deficiency rights) should create a win/win for borrowers and Wells Fargo.
Overall, it was an informing presentation and I left optimistic about the progress being made by at least one of the largest loan servicers in the U.S.Â Oh, and by the way, Wells recently signed a huge contract with Equator.Â I'll try to keep you posted on a launch date and any other details on that program.
The Carrabba Group
Keller Williams Hollywood Hills
P: (323) 899-2900