SCAM ALERT - Bank Jacking Price to Squeeze $$$

[SSG Snuggle Bunny]

Mortgage companies scamming customers
—Purple Avenger
With all these toxic mortgages around and mortgage companies holding bad paper they leveraged to the hilt to buy, there seems to be a new scam they're running to squeeze borrowers. Today I caught Wells Fargo trying to run one on me.

It goes like this:

You notify the borrower's insurance company that the value of the house has "gone up" and the insurance value needs to be increased accordingly...thus increasing the escrow amount the borrower has to pay each month...and increasing the amount that the mortgage company gets to float. They don't give a shit that trying to squeeze a few more dollars of float costs the customer potentially thousands of dollars a year more.

In my case it worked out like this:

There's only $20K left owing on this mortgage, so in reality Wells Fargo would be more than covered by the value of the lot alone even if the joint were flattened by a hurricane and only slab left. Just the lot with dirt work and workable slab would sell for around $35-40K these days.

Even in today's depressed market this house would sell in the $250K range.

I had the joint insured for about $130K because I know that's what I could build it for from scratch acting as my own GC. Remember, replacement cost != sale price. Sale price is affected by market factors, neighborhood, etc. Replacement cost factors in only materials and labor.

So these ****ing scumbags at Wells Fargo told the insurance company to pump the value up to $200K and that added close to $2000 to the insurance premium (and dramatically increases amount they'll be floating in the escrow account).

All this on a property they've only got a $20K interest left in that in no way qualifies as one of these toxic mortgages people are walking away from. They're ****ing over the people who ARE paying them to grab a few extra dollars of interest float.

Check your mortgage statements carefully folks. If they did it to me, they'll be trying to do it to everyone. The insurance company was more than willing to lower the insured value of the joint back in line with a replacement cost for me when I called.

http://ace.mu.nu/archives/258595.php

[Chris_]

You only have to insure to the amount of the mortgage (unless someone knows otherwise?  I am speaking of California.)

zero bongs.  Just a chance to brag about having only $20K left.  I could pay that off with one check if I was there.  i am 3-4 years away from total payoff, since I never took any "artificial equity" out.

[Lauri]

so, doesnt the city have to also state the value has gone up? which would mean EVERYone's escrow accounts would be going up?

i think people would be screaming over this - although it could be happening and we just havent heard about it yet.

still, how does the county explain how they just arbitrarily adjust the value?

in other news: we just got an overage check from our escrow company. they withheld too much and our county taxes actually just went down. almost 300 bucks a month!

so, its anecdotal, i realize that .. but he must have one ethically challenged mortgage company or county that he lives in.