Pick-A-Payment Loan Modifications
Wells Fargo Press Release
DES MOINES, Iowa — December 20, 2010
Wells Fargo & Co. (NYSE: WFC) announced today that beginning Dec. 20, 2010 through June 30, 2013, at-risk Wachovia Pick-a-Payment customers in California may be eligible to earn principal forgiveness by making on-time mortgage payments. The company also will contribute $33 million to the state to enlist help in customer outreach, and to prevent or mitigate the impacts of foreclosures in California communities.
The program is the result of an assurance agreement between Wells Fargo and California Attorney General Jerry Brown related to the marketing and origination practices World Savings Bank (a subsidiary of Golden West Financial) and Wachovia used for pay option mortgages prior to Wachovia’s merger with Wells Fargo on Dec. 31, 2008. It is an extension of Wells Fargo’s ongoing efforts to assist at-risk Wachovia Pick-a-Payment customers with home payment relief, which began immediately following the merger.
These efforts have included modifications designed to make homeownership sustainable using combinations of interest rate reductions, term extensions, and principal forgiveness. The company also has hosted three large-scale Home Preservation Workshops in California in Los Angeles, Oakland and Ontario, and opened 15 Home Preservation Centers across the state to provide at-risk customers with the opportunity to meet face-to-face with a home preservation specialist.
“The majority of Wachovia’s Pick-a-Payment customers reside in California,” said Mike Heid, co-president of Wells Fargo Home Mortgage. “We’re pleased that going forward the attorney general’s office 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.”
From January 2009 through November 2010, the company has extended significant home payment relief to more than 50,000 at-risk Wachovia Pick-a-Payment customers in California. The modifications have included some combination of interest rate reductions, term extensions, forgiveness on tax and insurances advances, and more than $2.9 billion in principal forgiveness. From Dec. 20, 2010 through June 30, 2013 – the period of the assurance agreement – the total amount of incremental relief for customers could be as much as $2.4 billion depending on the economy and individual borrower circumstances. This amount is consistent with the company’s prior expectations for loss mitigation in the California Pick-a-Payment portfolio, which was marked down in purchase accounting at the time of the Wachovia merger.
California joins 9 other states that have entered into similar agreements with Wells Fargo: Arizona, Colorado, Kansas, Florida, Illinois, Nevada, New Jersey, Texas and Washington.
The company will contact customers likely to be eligible for the new program via letters, and will maintain a dedicated helpline – including Spanish-speaking specialists – to assist borrowers. Homeowners who already have received a modification will not be eligible for the new program. Wells Fargo customers who originally took out pay option mortgages through Golden West or Wachovia who are looking for information about the loan modification program can call 888-565-1422.