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Comment by mikec3010 | Hacker News Reader

> due to lower interest

well, follow the money. why would they sell you a product that makes them less money if they have a material reason to deny it? Think like an insurance company: if you have a technical reason to deny paying a claim, you should absolutely do so, because it means less money for you (the ins. co).

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Wells Fargo most likely would only make money on the origination and other fees associated with the refi. The vast majority of mortgages are sold to the Fannie/freddies and Wells Fargo doesn't make a dime off the interest. So it would definitely benefit them to do the refi.

This is not logical. WF now makes nothing from the financing of the place rather than simply less than originally. They should understand that there's a market and someone else will do the refi.

I missed the last sentence where he said he went with a competitor

That probably works if customer has no other choice. Not familiar with how the numbers work here but it seems like if the customer refinances with another company then there is money left on the table and they just lost out. Also presumably they just burned a bridge with that customer for future financial activity.

While I don't disagree with your sentiment, I think WF would have done the refi if it met their criteria. The reason: they make a lot of money on new loans (refi or otherwise) due to the loan origination fee. In my case the fee was going to be about $1,500 for a ~$90,000 loan. Since mortgage originators usually process the payments, I assume they get some compensation for ongoing loans. However, my understanding is most mortgage originators don't "hold" the loans. They sell them off, so to speak, to be used as a part of an investment product (e.g. a CDO). Funny thing is, you might invest in a small part of your own home loan via a mutual fund (or pension fund). How screwed up is that! That's the real rotten thing about the industry. No skin in the game.

Did this happen to you?

If you or anyone you know lost a home because of Wells Fargo’s error, reporter Deon Roberts would like to hear from you. Contact him at deroberts@charlotteobserver.com or (704) 358-5248.

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