A local NBC television station aired Reverse Mortgage: Man calls 12 about dwindling credit line which describes how Donald Conn took out a reverse mortgage with Wells Fargo and after noticing small amounts ($3, $5, and $7 every month) disappearing from his credit line he called to ask Wells what was happening and they blamed HUD.
"They say it’s because of the computer program that HUD wrote. So, they’re blaming HUD," Donald said. Donald blames his lender for not telling him sooner. "Yea, yea, they admit there’s a boo boo, but they don’t know how to fix it," he said.
This isn’t happening only to Wells Fargo borrowers. I’ve received a few emails form differen’t RMD readers who have seen it happen to their borrowers as well. "We are seeing this on some loans we are servicing as well and it’s because the accrued monthly MIP, interest, and servicing fee is in an amount greater than the growth of the principal limit," said Ryan LaRose, Executive Vice President of Celink.
"Because interest rates are so low, the growth of the principal limit is not enough to exceed the interest accrued to the loan balance, which results in a pattern of negative loan growth," said LaRose. He added, "In addition, some of the HECM servicing calculations utilize differing interest types (current interest rate vs. expected average rate) and that can result in negative loan growth to the borrower."
The HUD spokesperson also says, this happens with the line of credit, loans. She also says he could have re-financed. Meantime, Donald has withdrawn his money from Wells Fargo and placed it in his bank. That way he’s not hit with additional fees.
