I got into work on Monday and see an urgent email from our secondary marketing department (the department at our company that works with all of our lenders) that stated Wells Fargo was not going to purchase ANY more of our Non-Owner Occupied Loans. Even the ones we had already locked! Apparently with the new RESPA laws that went into place, they are concerned that they may improperly classify a loan as an investment property that might actually be a second home where tighter regulations are required. The new RESPA law states that if there is a change in the Truth in Lending document that is greater than .125%, you must re-disclose this change to the client. Income producing loans (or investment property loans) are excluded from having to re-disclose. Wells is nervous that they may have to classify a loan as an investment property for underwriting purposes but in reality it’s a second home to the borrower. If there is a change on the Truth in Lending of more than .125% in this case, the borrower may be in a strong position to state Wells violated the RESPA law. Wells has decided to take the conservative approach with some of it correspondent channels. All retail departments and some correspondent channels remain unchanged. (And are still writing investment property loans) So far, no other major lenders have gone similar policy.
This is just one more example of how Government intervention is changing the appetite for lending.
3 responses so far ↓
1 Wells Fargo Pulling Out of Investment Property Loans (somewhat) | Minnesota Investment Property Blog // Mar 14, 2010 at 2:15 pm
[...] Check out our Investment Property Seminars under upcoming events or click the button to search the MLS. ScottWells Fargo announced last week that they decided to take the conservative approach with some of it correspondent channels and will no longer be purchasing some non-owner occupied loans in the secondary market. All retail departments and some correspondent channels will remain unchanged. Rob Bonahoom, with Cornerstone Mortgage, reports that this change may be a concern, by Wells Fargo, about mis-classifying some properties that could lead to RESPA violations. Read his article here at the Investment Property Mortgage Guy. [...]
2 Peak Appraisals » Wells Fargo Pulling Out of Investment Property Loans (somewhat) // Mar 16, 2010 at 6:38 am
[...] Wells Fargo announced last week that they decided to take the conservative approach with some of it correspondent channels and will no longer be purchasing some non-owner occupied loans in the secondary market. All retail departments and some correspondent channels will remain unchanged. Rob Bonahoom, with Cornerstone Mortgage, reports that this change may be a concern, by Wells Fargo, about mis-classifying some properties that could lead to RESPA violations. Read his article here at the Investment Property Mortgage Guy. [...]
3 investment property loan | RBA Money // Mar 29, 2010 at 1:31 pm
[...] Wells Exits the Investment Property Loan Market | Investment Mortgage Guy [...]
Leave a Comment