Did you hear? Wells Fargo recently surprised thousands of home loan customers by sending refund checks to a fraction of its Federal Housing Administration-backed borrowers.

The checks came with a letter informing recipients they had previously paid unnecessary mortgage-insurance related fees. But be very careful, once the checks are cashed, the borrowers lose the right to sue the nation's top home lender, on the grounds that the refunds came as a result of borrowers unnecessarily being placed into FHA-backed mortgages.

In an email to HousingWire, Wells Fargo stated: “During the course of our own internal review, we identified a small group of borrowers who had received FHA loans between 2009 and 2011 who may have qualified for conventional financing under circumstances where such financing could hav been a preferred option.”

FHA loans, typically offered to borrowers who are unable to pay the 20 percent down payment required for traditional loans, may be more expensive in terms of fees and insurance.

“The FHA loans impacted by this remediation are less than 2 percent of our total FHA originations for this period and the bulk of the refunds are between $2,000 and $5,000,” said Wells Fargo.

These loans were granted on the upward journey of Wells Fargo to become the No. 1 originator of loans. In September, Wells Fargo identified their error and began mailing notifications to customers. “FHA and conventional loan products have a great deal of overlap,” the Well Fargo email said, “there are many times that a borrower qualifies for both products, but that the FHA choice is the preferred choice for that customer given interest rate and down payment considerations, among other things.”

Effective November 1, Fannie Mae reached agreements with its nine mortgage insurers to allow short sales and deed-in-lieu to be processed more efficiently. The agreements will also speed up the foreclosure prevention process.

The new Federal Housing Finance Agency short sale guides for both Fannie Mae and Freddie Mac will go into effect Nov. 1. The Fannie Mae announcement shows mortgage insurers are on board with the changes.

The agreements will provide a more consistent and efficient approval process with servicers and borrowers. Servicers can now approve any short sales o deed-in-lieu without individual mortgage insurance approval as long as it meets Fannie Mae's requirements.

Fannie Mae senior vice president Leslie Peeler said short sales and deeds-in-lieu are essential tools to prevent foreclosures and also assist borrowers.”These delegation agreements create an even more streamlined process that will ultimately help more families avoid the costly effects of foreclosure and benefit taxpayers,” she said. “We are pleased that the mortgage insurance companies have stepped up to the plate with us to help more homeowners.” We will have to see how this will come to pass. Diane

Diane Gallagher is the president of the Lodi Association of Realtors and can be reached at larpres2012@yahoo.com