Wells Fargo currently is offering the option of short refinancing or commonly referred to as a short refi as long as you qualify. For those that would ask, “What is a short refinance?” This is when the bank/lender/loan servicer allows a homeowner to pay off their current mortgage with new financing many times from a different lender for a lower amount than what is owed. This is not a principal reduction as at that point in time as the loan is being paid of in it will be replace by this new loan and a principal reduction consists of lowering the principal for a preexisting loan. In some cases companies, mainly GMAC is a lender we have seen in the past, can refinance their own borrower(s) into a smaller mortgage but this is generally very rare. This brings us to today’s post about Wells Fargo and their basic procedural process of reviewing their clients for what they call a “short pay off”.
Wells Fargo is one of the toughest lenders to deal with. They will not review a client for a short refinance unless they have gone through the loan modification process and been declined. Well here’s the catch 22. In order to generally qualify for a loan modification with Wells Fargo you need to be behind. The problem is to get a short refinance you can not be delinquent. So this is the issue that brings us to the Mission Impossible. IF during the toughest lending times in recent history the Wells Fargo will not allow their clients to go directly to a short pay off but first have to become delinquent prior to applying for a loan modification the second part of this review for a short refi will never be possible.
Many other lenders do not experience the same type of procedural problems and inconsistencies but we are sure it’ll be a matter of time before we crack this conundrum.