Wells Fargo Modifying Loans For Old Wachovia & World Savings Pick-a-Pay Mortgages
Folsom Home Owners: Did you have a Wachovia or World Savings Pick-a-Pay Mortgage?
This from the Sacramento Business Journal (12/21/10)
Wells Fargo will modify loans to thousands of California homeowners with pick-a-pay loans, the controversial financing that led many consumers into bankruptcy and foreclosure — and greatly hurt the housing market.
The bank will pay $2 billion under the agreement.
Wells will also pay $32 million to thousands of homeowners who lost their homes through foreclosure with the pick-a-pay loans, which allowed borrowers to make payments at various levels, from the monthly interest and principal due to interest-only loans. Then, the loans would reset at much-higher rates, forcing homeowners deeper in debt or out of their homes.
The bad economy and double-digit jobless rate have increased the problem during the past few years, as cash-strapped homeowners get behind on their mortgages, including the Sacramento region, one of the hardest-hit markets for foreclosures in the nation.
Now, Wells Fargo did not approve or fund these loans, but Wachovia Bank and World Savings Bank did. Wachovia bought World Savings in 2006, and Wells Fargo acquired Wachovia two years later.
Under the agreement, Wells Fargo will offer affordable loan modifications to about 14,900 borrowers in the state with pick-a-pay loans approved by Wachovia or World Savings. Many of the loan modifications will include principal forgiveness, according to Attorney General officials. The agreement is expected to reach more than $2 billion.
Wells Fargo will also pay $32 million in restitution to more than 12,000 borrowers who used pick-a-pay loans and lost their homes through foreclosure. Payments will average about $2,650.
The bank has been aggressively working with homeowners who have the former Wachovia and World Savings loans, with about 577,000 modifications nationally, said Frankin Codel, chief financial officer of Wells Fargo Home Mortgage in Des Moines, Iowa. He added the banking giant will continue to work with homeowners who are experiencing problems with the pick-a-pay program.
The bank has conducted three home preservation workshops in the state, the closest was in Oakland. Wells Fargo also has opened 15 home preservations centers to help homeowners, Codel said.
California borrowers eligible for loan modifications should get a notice from Wells Fargo within the next two months, while borrowers who endured foreclosures should be contacted during the first six months of the year.
Wells Fargo customers looking for more information about the loan modification program, should call 888-565-1422.
“Customers were offered adjustable-rate loans with payments that mushroomed to amounts that ultimately thousands of borrowers could not afford,” California Attorney General Jerry Brown said in a news release Monday. “Recognizing the harm caused by these loans, Wells Fargo accepted responsibility and entered into this settlement agreement.”
Wells Fargo Home Mortgage co-president Mike Heid said the agreement Monday with the Attorney General will “assist with outreach, so that we can continue to work with as many customers as possible on the options available to them to prevent foreclosures.”
Wells Fargo is the leading bank in the four-county Sacramento region, with about $8 billion in deposits and 25 percent market share, according to the Federal Deposit Insurance Corp.
Wells Fargo has reached similar agreements in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington state.