In November 1979, Smith obtained a loan in the amount of $81,200 from Wells Fargo secured by his condominium. The remaining principal amount of $72,600 became due and payable on November 5, 1989.
Smith missed three payments on August, September, and October, 1989. Commencing in June 1990, Wells Fargo began foreclosure proceedings. On July 19, 1990, notice of default and 90-day notice of foreclosure were served on Smith.
In August 1990, Smith applied to a branch of Wells Fargo for a loan to refinance the loan. The loan application was sent to the loan department of Wells Fargo on September 13, 1990. The loan application was rejected. Over the course of the next two months, Smith attempted to allay the credit concerns, which had led to the rejection of his loan application.
On November 7, 1990, a 30-day notice of sale under foreclosure was recorded scheduling a sale of the property for December 7, 1990; the notice indicated $8,327 was still due on the loan. On December 6, 1990, Smith’s loan application was approved subject to a confirming appraisal.
On December 2, 1990, Smith was informed that he was required by federal regulations to post a $1,500 deposit for the bank appraisal. Instead of posting the appraisal deposit, which he believed was excessive, Smith had already obtained his own appraisal of the property. Smith’s appraiser valued the property at between $350,000 and $360,000. This appraisal was submitted to Wells Fargo on December 4, 1990.
Smith was informed that his appraisal did not comply with federal regulations and he was required to deposit $1,500 for a bank appraisal. Smith requested the amount necessary to pay off the loan and was informed the amount owing was $85,073.60. Smith believed this amount was excessive. Smith asked for the amount to be provided to him in writing; an unnamed Wells Fargo employee told Smith she would do this and told Smith not to worry about the foreclosure sale. Smith neither deposited the $1,500 appraisal sum nor paid off the loan.
After confirming that neither amount had been received, Wells Fargo authorized the foreclosure sale to go forward. Jones, a speculator, bought the property at the foreclosure sale for $85,073.60, the amount of the debt. He was the sole bidder.
Smith learned of the sale later that same day. Smith obtained a cashier’s check for the amount of the debt $85,073.60 and sent the check to the bank.
All the while, Smith had available cash deposits at the Wells Fargo of $500,000. He thought Wells Fargo could deduct the loan payments from his other accounts, but Wells Fargo did not do so even though he called them on the phone in December and said it would be OK with him. The cashiers check was returned to Smith.
Questions (100 words each)
- Is there any way Smith could get the property back?
- Why did Wells Fargo decline to deduct the money Smith owed from his other accounts when he called them to give them permission?