Wells Fargo to modify 15,000 mortgages

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- Wells Fargo, in an agreement with California's attorney general announced Monday, said it would provide $2 billion worth of loan modifications to nearly 15,000 homeowners.

Under the deal, the bank is also paying a total of $32 million to borrowers who lost their homes to foreclosure, according to the AG.

Attorney General Jerry Brown said Wells Fargo (WFC, Fortune 500) will offer modifications to 14,900 homeowners, who have so-called "pick-a-pay" loans.

"Customers were offered adjustable-rate loans, with payments that mushroomed to amounts that ultimately thousands of borrowers could not afford," said Brown, who takes over as California's governor next month. "Recognizing the harm caused by these loans -- Wells Fargo accepted responsibility and entered in this settlement with my office."

Pick-a-pay loans, where the rate changes throughout the life of the loan, became notorious during the housing market meltdown. According to the AG's office, payments often started low -- at levels that were "insufficient to cover the monthly interest owed, and the unpaid interest was added to the loan balance." The loans would ultimately increase "dramatically," soaring to unaffordable heights for the homeowner and creating the risk of foreclosure.

In addition to the loan modifications, Wells Fargo will pay $32 million in restitution to more than 12,000 pick-a-pay borrowers who lost their homes through foreclosure in California.

The attorney general noted that the loans were not made by Wells Fargo, but by banks that it acquired: World Savings and Wachovia.

Wells Fargo stated that so far it has already extended significant home payment relief to more than 50,000 at-risk, pick-a-payment homeowners in California -- through interest rate reductions, term extensions, tax forgiveness, insurance advances and principal forgiveness.

This adds to the list of pick-a-pay settlements that Wells Fargo has previously signed with attorney generals in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington. To top of page


Overnight Avg Rate Latest Change Last Week
30 yr fixed3.98%4.26%
15 yr fixed3.03%3.15%
5/1 ARM2.95%3.15%
30 yr refi4.09%4.34%
15 yr refi3.13%3.22%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
  • Find Homes for sale
    Real estate and homes for sale on Trulia

  • Property Type
  • Find a home in: New York | Atlanta | Chicago | Los Angeles
  • Washington D.C | Houston | Philadelphia | More options
Index Last Change % Change
Dow 17,741.44 111.17 0.63%
Nasdaq 5,102.33 13.12 0.26%
S&P 500 2,104.84 11.59 0.55%
Treasuries 2.29 0.04 1.60%
Data as of 12:01pm ET
Company Price Change % Change
Bank of America Corp... 18.10 0.23 1.26%
Pfizer Inc 35.76 0.41 1.16%
Ford Motor Co 15.08 0.40 2.72%
Micron Technology In... 20.27 0.52 2.63%
AT&T Inc 34.82 0.49 1.43%
Data as of 11:47am ET

Sections

Select Delta travelers may soon have the option to upgrade their commercial ticket to fly on a private jet that would otherwise be flying empty. More

Thanks in large part to the expansion of coverage under Obamacare, health care spending is expected to have increased by 5.5%, according to federal estimates released Tuesday. It's the first time the rate would exceed 5% since 2007. More

Toshiba's interim chief executive Masashi Muromachi will take a 90% pay cut for the next two months as a massive accounting scandal continues to rock the company. More

Canary, a startup in Boulder, Colo., just released an app for iPhones and iPads that detects and measures marijuana intoxication in users. More

Quitting without a plan can hurt your career, but here are some paths to quitting that worked for some. More