Philly’s coronavirus response

Philly’s largest bank flip-flops on mortgage assistance, leaving homeowners hanging

Wells Fargo, which recently settled a predatory loan lawsuit, reversed a decision to pull out of Pa.’s CARES Act program.

Wells Fargo Bank said it wouldn't participate in CARES Act mortgage loans in Pa. — then reversed its decision

Wells Fargo Bank said it wouldn't participate in CARES Act mortgage loans in Pa. — then reversed its decision

Google Street View; Courtesy Mike Zwick
jasonpeter

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Some Philadelphia homeowners feel left in the lurch after Wells Fargo pulled out of the state’s CARES Act mortgage assistance program, then reversed course a week before the deadline.

Kingsessing resident Mike Zwick, like many Americans, has a partner who is considered high-risk for COVID-19. Realizing his job at Trader Joe’s was likely to expose him to the virus, Zwick took time off to keep his partner safe. Then he sought ways to keep his mortgage at bay while the pandemic raged and the economy tanked.

As soon as the option became available in Pennsylvania, Zwick, 38, applied for assistance.

He had a good chance of getting help. There was $175 million of federal CARES Act money in a Pa. Housing and Finance Agency program to provide aid to struggling renters and homeowners “hurt economically during the pandemic.” Through the Pandemic Mortgage Assistance Program (PMAP), $25 million was specifically designated for mortgage relief, offering a payment boost of up to $1,000 per month for six months.

Zwick filled out his PMAP application on July 6, the first day it was available online. He was approved on July 15.

Following his approval, Wells Fargo, Zwick’s mortgage lender, set and missed deadlines to accept or deny the funds. Aug. 27 came and went. Sept. 11 flew by. Two months after his application was approved, he finally got confirmation — but it wasn’t what he expected.

On Sept. 17, a bank representative called Zwick and told him the bank would “not participate in the relief program.”

The 38-year-old said he felt stranded and unsure. He was approved by the government, he said, and got a loan via a small community bank. The loan was then sold to Wells Fargo. “It’s ridiculous, they don’t have to do much of anything,” Zwick said. “This is money from the state.”

It wasn’t just him. Wells Fargo had decided to cut off the entire PMAP program, citing potential inequity of eligibility, lack of clarity from the state, and confusion for its investors.

“After a careful review…we have determined that we will be unable to participate in the program,” said Wells Fargo spokesperson James Baum in a statement.

A week after Zwick was denied, Wells Fargo announced it would rescind its decision and rejoin the program.

‘Outrageous’ maneuver from a bank with uneven history

As of mid-September, 420 Philadelphians had applied for PMAP mortgage assistance, out of 2.2k across the state.

Multiple banks are participating, including big institutions like PNC, according to the Inquirer. Applications for the program close entirely on Sept. 30, though only $8.4 million of the full $25 million in CARES Act funding has been allocated to homeowners so far.

Fair mortgage advocates called Wells Fargo’s initial desertion of the program “outrageous,” and potentially enough legal reason to halt a foreclosure, if it had come to that.

“Could the lender’s failure to accept the money be considered an equitable defense for foreclosure? I think it possibly could,” said Irwin Trauss, an attorney for Philadelphia Legal Assistance, commenting on the Wells Fargo situation.

If the policy hadn’t been reversed, James Jackson, a mortgage advocate for the Philadelphia Unemployment Project said, the bank would have been “stopping regular everyday people who ended up unemployed from the pandemic from receiving federal assistance for housing.”

Wells Fargo has a blotchy record when it comes to mortgages in Philadelphia.

In 2019, the bank settled a lawsuit brought by the city, accusing it of violating the Fair Housing Act by targeting communities of color with predatory, high-interest loans (sometimes called “reverse redlining”). Wells Fargo did not admit liability in the case, but contributed $10 million to Philly’s sustainable housing-related programs.

Now that Wells Fargo has agreed to rejoin PMAP, Zwick is unsure what he needs to do. He called the bank last week, but didn’t get an answer.

Still, Zwick is “confident” he’ll get the assistance, he said. “There’s no reason we shouldn’t.”

Want some more? Explore other Philly’s coronavirus response stories.

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