"Wells Fargo Misleads Homebuyers By Not Saying Foreclosed Properties Are Bank-Owned"
Among Wall Street banks, Wells Fargo has been one of the biggest perpetrators of fraud, deception, and abuse during the housing and foreclosure crisis. The bank has used robo-signers to fraudulently sign foreclosure documents, foreclosed on homeowners who followed the bank’s directions, and illegally foreclosed on military veterans.
Now, Wells Fargo and other banks have found another way to mislead consumers. While trying to sell the properties it holds in foreclosure, Wells Fargo has urged real estate agents not to disclose that such properties are bank-owned, and in other cases, it has used divisions it owns to avoid identifying itself as the owner of foreclosed homes, the Palm Beach Post reports. Under such conditions, would-be homeowners don’t discover that the property is in foreclosure until they place a contract on the house:
It’s a little-known fact that Wells Fargo Bank’s Premier Asset Services division, which sells bank-owned homes, instructs agents who sell these houses to list the owner as “Owner of Record,” and not Wells Fargo. Premier Asset Services also sells homes owned by other banks.
The Multiple Listing Service, which is used by real estate agents to list properties, includes a category for bank-owned property. But here again, agents are told by many banks not to disclose the fact that the property is, in fact, owned by a bank. [...]
If a buyer wishes to put a contract on a bank-owned home, then it will become clear through paperwork the property is a foreclosure, and any defects or repairs can be corrected or reflected in the sales price, Smith said.
Wells Fargo makes such strident efforts to avoid labeling homes as “bank-owned” because there is a “negative connotation” associated with those properties, Tyler Smith, a vice president at Premier Asset Services, said. But as consumer activists told the Post, many home buyers aren’t interested in such properties because bank-owned homes often have “deferred maintenance, hidden defects and a host of problems caused by neglect or vandalism,” as the banks often ignore their foreclosed-upon properties.
Worse yet, Smith acknowledged that the practices were deceptive in nature, but said the bank’s true motivation for misleading customers was to protect local communities. In reality, though, the decision likely boils down to money. “There’s definitely a perception the bank is going to sell the property for a lower price than if it was a regular seller of a home in a neighborhood,” a local real estate attorney told the Post. “The bank wants as much money as it can get because it’s costing (the bank) homeowners association fees and insurance.”