Wells Fargo Bank Sending Refund Checks to Many FHA Loan Borrowers
On 10/27/2012, L.A. Times reported that Wells Fargo is sending out Refund Checks to many borrowers who took out government backed FHA loans between 2009 and 2011. The checks varied in amounts but many were approximately $6350 and including $4847 for upfront premiums, $1154 for annual PMI fees and $355 for increased closing costs. The bank is sending the refund checks to borrowers who qualified for a Conforming Conventional loan but were steered to a FHA loan instead. Possibly the reason given was that loan officers made more commissions on the FHA loan therefore were not honest with the borrowers. On a loan for $350,000, loan officers made $8750 commissions (2.5% of contract price) on a FHA loan versus $6350 commissions (1.75%) on a Conventional Loan. There is only one restriction on accepting the refund check and cashing it. The borrower cannot sue Wells Fargo at a later time for the unnecessary fees and unsavory practices of the loan officers back then. Wells Fargo did not comment on the refund checks but did say that it is their policy to make sure that all their customers have all the loan options and get the appropriate loan based on their financial situation and that any compensation reflects that commitment. *I gave this a lot of thought and decided if it had been me receiving a check, I would have probably cashed the refund check too. Considering if the State Attorney's Office did sue, and considering how long a class action takes, the large amount of settlement money that goes towards attorney fees and divided by the large number of borrowers, I thought the $6350 is probably more than I would receive if I waited. I am sure the borrowers are going to consider it seriously and perhaps talk to an attorney before cashing the check. Also, it is my understanding that the bank is putting these customers into to appropriate loan type if they qualify.
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