Wells Fargo has announced that beginning Dec. 18, 2010, through June 30, 2013, at-risk Wachovia Pick-a-Payment customers may be eligible to earn principal forgiveness by making on-time mortgage payments. The company also will contribute about $24 million to eight states to enlist help in customer outreach, and to prevent or mitigate the impacts of foreclosures in these communities. The terms of this agreement have been contemplated in the company’s financial projections, and are expected to have no impact on third-quarter financial results.
The program is part of an agreement with attorneys general in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington who expressed concerns about the manner in which pay-option mortgages were originally marketed by World Savings Bank and Wachovia, who originated these loans prior to merging with Wells Fargo in late 2008. The agreement expands on Wells Fargo’s existing home preservation efforts. Through August 2010, at-risk Wachovia Pick-a-Payment customers already had been given almost $3.4 billion in principal forgiveness.
“In light of the unprecedented changes in our economy, Wells Fargo will continue to work with leaders across the nation on steps to help stabilize communities,” said Mike Heid, co-president of Wells Fargo Home Mortgage.
“We are pleased that Wells Fargo has stepped forward and agreed to work with us in avoiding another wave of foreclosures in our states,” said Arizona Attorney General Terry Goddard, the attorney general who led the eight-state effort. “Their willingness to add to their existing principal forgiveness program is important to help consumers facing hardships who are deeply underwater in their homes.”
By Dec. 18, 2010, 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. Borrowers who already have received a modification will not be eligible for the new program. Wells Fargo customers who originally took out mortgages through Wachovia or Golden West who are looking for information about the loan modification program can call (888) 565-1422.
For more information, visit www.wellsfargo.com.