
Wells Fargo says hundreds of customers lost homes after computer glitch - bufferoverflow
https://money.cnn.com/2018/08/04/news/companies/wells-fargo-mortgage-modification/index.html
======
kpwagner
In my experience, mortgage originators rely on box-checking to get mortgages
to pass. They make no decisions; it's an amoral, automatic process which
happens to be much less efficient than it could be as the industry clings to
the idea that homebuyers need to talk to someone on the phone and the people
in seats are actually necessary.

Around 2013, WF Mortgage denied me a refinance on a property. It was my
primary home (high-rise condo) when I bought it, then it became a rental. The
reason for the denial was, my condo unit was in the same building as a hotel
(downtown in a city), so it was labelled a "condotel". This was a shock to me.
After researching condotels, I explained that the definition did not fit my
property, but it didn't matter to WF. This was frustrating to me because WF
originated the original mortgage when I purchase the property in 2007, and I
never missed a payment. The refinance would lower my payment significantly due
to lower interest and a large chunk of the principal that I paid down. They
did not care at all. They all but told me to fuck off and stop calling them.
It was like they wanted anti customer loyalty. I used Quicken Loans for the
refinance--no problems.

~~~
mikec3010
> due to lower interest

well, follow the money. why would they sell you a product that makes them
_less_ money if they have a material reason to deny it? Think like an
insurance company: if you have a technical reason to deny paying a claim, you
should absolutely do so, because it means less money for you (the ins. co).

~~~
lordnacho
This is not logical. WF now makes nothing from the financing of the place
rather than simply less than originally. They should understand that there's a
market and someone else will do the refi.

~~~
mikec3010
I missed the last sentence where he said he went with a competitor

------
rkagerer
I'm chronically ashamed by the degree of tolerance to shoddy work in our
field.

If software engineers were held to the same standard as civil engineers,
people would go to jail. I empathize humans make mistakes, but I've also known
programmers who just don't care about striving toward perfect, bug-free code.
In some cases it's just a job not a passion, in others they're overworked and
learned it doesn't pay to go slowly and correctly.

Kudos to all of you true craftsmen out there who do take care and pride in the
quality of your work.

~~~
paulcole
> I'm chronically ashamed by the degree of tolerance to shoddy work in our
> field.

The vast majority of people in every field are producing average or shoddy
work. Just the way it goes.

Most people (myself included) have other things to focus on– family, health,
finances, hobbies. I’d much rather screw something up at work than something
that really matters to me.

~~~
gaius
_I’d much rather screw something up at work than something that really matters
to me._

That's OK right up until the point screw-ups materially impact other people's
lives. I mean noone cares about some cheesy website sure, but these are
people's _homes_.

------
fencepost
That 20k per foreclosure is probably not going to even cover Wells Fargo's
legal expenses following this. They're going to be sued not just for the loss
of value/equity caused by a foreclosure but for the ongoing costs of loss of a
home - possibly more expensive shorter term housing, the credit damage of a
foreclosure (and increased costs due to that), legal expenses, possible loss
of employment due to having to move or having no stable home, etc.

What Wells Fargo did was take people already on the edge and throw an anvil at
them.

~~~
WillPostForFood
More like it took people already over the edge, and didn't throw them the rope
to pull them back. These were people already going down in foreclosure, who
didn't get special assistance. Very bad, but not an anvil.

~~~
mikeash
Seems more like pushing them over. Foreclosure isn’t a natural phenomenon.
Wells Fargo had to make it happen.

~~~
JackFr
True, foreclosures need to be initiated. What should a bank do about a
mortgage thats 3 months delinquent? Should they just stop collecting?

If its possible that they can reasonably modify the loan to terms that make
repayment feasible, they should as it's a win-win, not because they are
contractually obligated to in any way. But if given what they know about the
property and the borrower's income, there is no feasible way to mod the loan,
prudence requires that they foreclose.

This "bug" mistakenly put people in the wrong category.

~~~
mikeash
Right, so, instead of helping people back from the edge of the cliff, they
shoved them off.

The answer to your question seems to be that they should examine the account
and offer a loan modification if certain conditions are met. They failed at
this for these people. That other people aren’t eligible for modification and
would be foreclosed on regardless is not relevant here.

------
maxxxxx
With a company like Wells Fargo that's moving from scandal to scandal I wonder
when is it enough and we should just close the company? They repeatedly have
demonstrated that they are not able to engage in ethical business practices.

~~~
catacombs
Sadly, they are too big to close/fail.

~~~
DareRight
Ok. How about we forgive every outstanding mortgage they hold? They're so big,
they can take a hit, right?

What's that? They don't hold many mortgages? They sell them all upstream? Then
why are they foreclosing? But it's a good point that they have such easy
access to the secondary market. How about we cut that off, too?

Maybe they are too big to fail overnight. But we can do it in bites. Diminish
one piece of their business at a time. Eventually (sooner than you think) they
can be trimmed back to a manageable size. But we should start right away. With
their track record, each new infraction should result in the death penalty for
some piece of their empire.

Then again, we don't need the government to punish them. We just need account
holders to close their accounts. If people are not willing to do this, why
should the government that represents those people get involved? One
reasonable thing that the government could do is require WF to pay the
refinance fees for anybody who wants to move their mortgage (or even the
servicing of their mortgage) away from WF. Then people can impose a personal
penalty on WF without any cost to themselves except the time and effort to go
through the process. If we are fed up enough, we could even require WF to buy
down the refi to the same interest rate. But that would only benefit recent
mortgages who should have known better to begin with.

~~~
twblalock
I'm a Wells Fargo account holder. I haven't closed my account. I don't really
see a reason to. The other big banks are just as amoral, and they would screw
their customers in a heartbeat if they thought they could get away with it.
The main difference between Wells Fargo and other banks is that Wells Fargo
got caught.

I wouldn't consider a local bank or a credit union, because I like being able
to find a branch anywhere in the country, and small/local financial
institutions are not exempt from bad behavior either. They also tend to have
significantly inferior online banking and mobile apps.

Closing my account would just mean moving from one amoral giant bank to
another.

~~~
maxxxxx
Do you really need a branch anywhere in the country? My credit union has ATMs
everywhere which is good enough for me. I go to a branch maybe once per year
if at all.

~~~
Sodman
I'm with the parent on this... I switched from BoA to a local bank after
having a fantastic customer service experience getting a mortgage there, and
wanting to support local instead of megacorps.

No online check sending, no mobile check deposit, very few ATMs, doesn't
accept Zelle, and doesn't integrate with Mint (Mandatory 2FA issues). I miss
the BoA features and regret the move.

~~~
maxxxxx
My credit union (Baxter) has all of these. I think it's still good to avoid
the big guys but I guess you have to check if your local bank or credit union
is suitable for you.

------
denimnerd
i work for a bank. my coworkers are mostly not very competent. also sometimes
when we move to a new system we don’t get the actual business logic. we just
reverse engineer it from the data. the people who knew how it worked were laid
off a long time ago

~~~
selestify
Why is that? Is it because of low pay?

~~~
Spooky23
Government style bureaucracy with MBA management culture, heavy risk
management, and constant growth by acquisition.

Some roles pay very well, but are inflexible and boring. I knew a guy making
$180k as a contractor to be a storage engineer. His _entire_ job was
fulfilling SAN zoning requests. He ended up bootstrapping a startup just to
stay sane.

~~~
denimnerd
Yeah there’s a thousand vice presidents at my location that make 160k which in
TX is a high wage. they don’t have high productivity compared to a real tech
company. it’s all manual bureaucratic work.

~~~
Spooky23
I had a grand-uncle was a bank Vice President. His main responsibility was
reading the obituaries of about 25 papers and making sure relatives didn’t
open the safe deposit boxes before probate.

Not sure of salary, but his schtick was 12 month leases of black Cadillacs, so
it was pretty good. :)

~~~
denimnerd
vp is nothing at a bank but i guess it looks good on a resume lol

------
foobarian
Interesting that mistakes like this tend to be in the big co's favor. You
never read about 400 people getting a free home due to a bug.

~~~
wmf
There are stories about people who stopped paying their mortgage and got away
with it because the mortgage had been resold several times and there wasn't
clear paperwork about who owned it. But these may be urban legends.

~~~
lisper
Nope, it really happened:

[https://www.nytimes.com/2009/10/25/business/economy/25gret.h...](https://www.nytimes.com/2009/10/25/business/economy/25gret.html)

------
makecheck
When the result of a decision is to _kick someone out of their damned home_ ,
why the hell isn’t it someone’s job to read that family’s file cover-to-cover
before pulling the trigger? That is NOT the time to rely on any auto-push-
button software.

~~~
a3n
Because it would cost money to pay someone to read the file.

For a corporation, _every moment_ is the time to rely on auto-push-button,
wage avoiding software.

Corporations are amoral at best.

------
DamnInteresting
To spare a few the arithmetic: Wells Fargo set aside $8 million for
compensation; divided among 400 persons, this works out to $20,000 each.

~~~
JackFr
That actually sounds like a pretty reasonable amount, given that the borrowers
likely had close to 0% equity in the homes they owned.

~~~
bogomipz
I guess you don't realize that closing costs on a home are between 2 and 5% of
the purchase price?

There's something called the "the five year" rule, which is generally
considered the amount of time it takes to recoup the closing costs of a home
purchase [1]

Now add the price of two relocations - moving into the house and moving out of
the house.

These folks are like if they net anything more than a few grand on this.

[1] [https://moneyning.com/housing/the-five-year-rule-for-
buying-...](https://moneyning.com/housing/the-five-year-rule-for-buying-a-
house/)

------
confounded
Do you Bank with Wells Fargo?

I do. I’ve beeen gradually winding down my account, and will soon feel even
better than I did when I got rid of Comcast.

Check out the Credit Unions in your area. They’re usually great!

~~~
Zelphyr
Good for you and you should celebrate when you finally close your account.
I’ll go so far as to say that anyone who willfully banks with Wells Fargo has
blood on their hands. This is an immoral company.

To say that you won’t switch banks because they’re all just as bad is absurd.
That’s just a lazy excuse by a lazy person in my opinion. I’ll take downvotes
for my negative post but Wells Fargo screwed me any my family over severely
during the recession and it took years to dig out of that mess. Not a single
Wells Fargo employee so much as feigned an apology.

------
throw2016
This 'glitch' feels like a stretch. People were going to lose their homes so
they would have followed up with the bank, so there would be support staff,
escalations, and multiple departments and chains involved to fix any genuine
glitch, so is Well Fargo saying that their entire process failed?

For instance if a billion dollars lands in your account, do you think there
will be no process to fix the 'computer glitch'?

~~~
brokenmachine
Yes, funny how these errors seem to always work out in the big company's
favor.

------
40acres
Can't wait for the next round of apology commercials.

~~~
rconti
Established 1852. Re-established in 2018. Re-re-established in June 2018. Re-
re-re-established in August 2018.

------
ilaksh
This affected my sister's friend supposedly. He's been living with her and her
family for the last few months. Nice guy, but it is a bit awkward having this
stranger show up whenever she stops by with the rest of her family.

------
MatthewWilkes
I know GDPR isn't very popular with some users of this site, but the rights
related to automated decision making are a wonderful thing.

------
spootie
Did this happen to you?

If you or anyone you know lost a home because of Wells Fargo’s error, reporter
Deon Roberts would like to hear from you. Contact him at
deroberts@charlotteobserver.com or (704) 358-5248.

------
kown223
Buy Bitcoin, let the crooked bans.

~~~
gallerdude
Don't confuse evil for incompetence.

~~~
doc_gunthrop
There's a scene in The Big Short involving discussion over the rise in
subprime mortgage bond prices despite an increase in mortgage defaults:

Mark Baum: "That's not stupidity. That's fraud."

Jared Vennett: "Tell me the difference between stupid and illegal, and I'll
have my wife's brother arrested."

