Cutting ties with Wells Fargo

December 27, 2017 1:33 PM

My mortgage was sold to Wells Fargo. I'd like to vote with my wallet by cutting these new ties with Wells Fargo. I'd prefer not to reset the 30 year term since I've done that a couple of times already refinancing. We've owned the house for 15 years and our current mortgage has 25 years until maturity. Maybe I'm wrong about wanting to avoid that. I'm 51, if it matters. What's my best next step?
posted by humboldt32 to Work & Money (12 answers total)

There's nothing stopping you from refinancing with another bank and getting a new 15 year, 20 year, or (somewhat uncommon, but not unheard of) 25 year term. You could also refinance with a 30 year term and then start paying it as if it were a shorter term.

How much is this worth to you? If you last refinanced your mortgage five years ago, it is likely you will have to pay half a percent or a full percent more in interest, which has a commensurate increase in your monthly payment.

I'd suggest that it's entirely possible that simply paying off your mortgage quicker would be worse for Wells Fargo because they'd lose out on interest payments but would have still paid a fee to buy your mortgage.
posted by saeculorum at 1:46 PM on December 27, 2017 [1 favorite]

You don't mention what interest rate you have. You could potentially refinance to a 15-year term for a negligible change in payment amount. But there's no way to guarantee that your next lender won't sell your mortgage to Wells Fargo, I don't think.
posted by slidell at 1:48 PM on December 27, 2017

Response by poster: The current mortgage is at 3.625%
posted by humboldt32 at 2:13 PM on December 27, 2017

Best answer: Yes, it's important to realize that any new lender would be free to sell your mortgage on without consulting you, including to Wells Fargo. Prepayment (properly indicating that the excess is to be applied to principal, not interest) is probably your best means of annoying them. I took a lot of pleasure in paying off some 20-year (I think) private student loans with Citi within about five. Every time I made an extra payment towards principal, I imagined the value of the loan to them falling.
posted by praemunire at 2:27 PM on December 27, 2017 [6 favorites]

Best answer: it's important to realize that any new lender would be free to sell your mortgage on without consulting you, including to Wells Fargo. Prepayment (properly indicating that the excess is to be applied to principal, not interest) is probably your best means of annoying them.

This. If you can get your mortgage paid off by the time you are 65, you will also be doing your retirement a huge favour.
posted by DarlingBri at 2:44 PM on December 27, 2017 [3 favorites]

Best answer: If you do not anticipate needing 30 years to pay off your mortgage, then you are paying an unnecessarily high interest rate for that option. If you think you can pay off your mortgage sooner, then you may save by refinancing to a 15 or 20 year mortgage. The bank is charging you a higher rate to cover their risk for a 30 year mortgage.

If you can find a no-fee lower rate for a 15-year mortgage, you should see if the monthly payments are in your budget. If you can't, then you should consider making extra payments to pay off your existing loan earlier.

Making extra payments is the same as earning a risk-free 3.62% on an investment. There are no other risk-free investments at this time that will provide you that return.

With the doubling of the standard deduction in the new tax bill, there is less value in deductibility of mortgage interest in many cases. Paying the mortgage off earlier makes even more sense.
posted by JackFlash at 3:04 PM on December 27, 2017

Not to toot Wells Fargo’s horn by any means, but they do have the option of paying your mortgage with a half payment every two weeks instead of once a month, so that you’re paying two extra payments a year. It’s very easy to set up and you can do it online. Hell, you can do it anyway while you consider your options.
posted by Autumnheart at 4:49 PM on December 27, 2017 [1 favorite]

Regarding the 2 week payment option: Some banks charge a fee to enroll in such a program. I feel that is BS, as they are charging me to get their money back faster.
posted by coberh at 5:02 PM on December 27, 2017

they are charging me to get their money back faster.

Yeah, obviously. They want the loan outstanding. It's how they make money. It's why there are prepayment penalties.
posted by jpe at 8:32 PM on December 27, 2017

FWIW, oftentimes credit unions will hold onto mortgages, especially local ones. We have considered moving our mortgage to our credit union specifically
Has a policy not to sell them. They're okay in terms of financial institutions and ethics, which isn't saying much. But they're better than larger banks.

We were looking to refinance, but with interest rates ticking up, the timing was off for us. But it might pan out for you.
posted by furnace.heart at 9:09 PM on December 27, 2017 [1 favorite]

Yes. If banks hold the loans and do not resell them they are often called portfolio loans. Banks usually want really strong consumers with high credit scores for portfolio loans. Call the bank or Co-op of your choice.
Keep in mind refi fees might apply and might be steep.
posted by littlewater at 12:26 AM on December 28, 2017 [1 favorite]

I was in your position, and after Wells Fargo acquired my mortgage, they did something unforgivably stupid.

One day I got a letter from WF telling me that they'd done me a favor: they'd combined all my accounts so that I could enjoy the improved "convenience". Puzzled, knowing I only had a mortgage with them, I phoned and asked what the heck they were talking about.

WF had only my mortgage; I do my banking at a local credit union.
My mom had a bank account with WF.
My paternal uncle had multiple accounts with WF.

Yes, indeed, they'd merged my mortgage, my mom's savings/checking, and my uncle's accounts all into my name. Well, getting that debacle fixed took some time, and naturally, after that I no longer trusted them with my (and my mother's) finances. So mom switched to my credit union, and I refinanced my mortgage into a shorter 15-year loan with my credit union. I trust them, and they've kept my loan in their portfolio.

I wouldn't trust Wells Fargo to properly look after a wad of chewing gum.
posted by Lunaloon at 6:36 AM on December 28, 2017 [7 favorites]