TALLAHASSEE, FL – October 6, 2010 – (RealEstateRama) — Attorney General Bill McCollum today announced a multi state agreement with Wells Fargo Bank over allegations of deceptive marketing of payment option adjustable rate mortgage loans (POA’s) by Wachovia Corporation and Golden West Corporation, before Wells Fargo acquired the companies. From April 1, 2010 through the term of the agreement, more than 4,000 Florida POA borrowers will be eligible for loan modifications that are expected to provide almost $388 million in mortgage relief in Florida. This sum includes more than $208 million in principal forgiveness for Florida homeowners. Overall, loan modifications will be offered to 8,700 borrowers in eight states with a total economic value estimated to be more than $772 million through mid-2013.
Allegedly, Wachovia Corporation and Golden West Corporation failed to fully explain that the minimum payment due in the first years of the loan would not cover the full amount of accrued interest, which in turn would increase the amount of the loan, or negatively amortize the loan. Borrowers eventually faced higher monthly payments, as well as higher loan balances, when they began making full monthly payments.
Wells Fargo, in a settlement with Florida, Arizona, Colorado, New Jersey, Washington, Texas, Illinois and Nevada, agreed that between December 1, 2010, and June 30, 2013, the bank will offer modifications to eligible qualified residential POA borrowers who are either 60 days delinquent or facing imminent default. Borrowers will first be considered for the federal Home Affordable Modification Program (HAMP) and if the borrower cannot qualify under HAMP or elects not to accept a HAMP modification, Wells Fargo will consider the borrower for its new modification program, known as Mortgage Assistance Program 2 (MAP2R).
The agreement also makes a number of substantial servicing commitments for its POA borrowers including ensuring adequately staffed help lines to serve consumers, providing a single, primary point of contact to assist borrowers seeking modifications, making decisions on modifications within 30 calendar days of receiving a complete application, establishing a formal second look or appeal process for borrowers who are turned down for a modification, and more clearly communicating with borrowers to avoid confusion during the process.
Wells Fargo will also offer other foreclosure alternatives, including short sale, deed-in-lieu, and relocation assistance. The agreement provides for a compliance monitor and quarterly reporting to the eight Attorneys General. Wells Fargo will also pay more than $10.2 million to the Florida Attorney General’s Office to assist with the state’s efforts to prevent or mitigate foreclosures and prevent mortgage or loan modification fraud, along with investigative costs.
Wells Fargo customers who originally took out mortgages through Wachovia or Golden West and are looking for information about the loan modification program can call 1-888-565-1422.
A copy of the agreement can be found at http://myfloridalegal.com/webfiles.nsf/WF/MRAY-89YKBD/$file/Assurance.pdf.
Phone: (850) 245-0150