Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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 fixed4.01%3.96%
15 yr fixed3.14%3.12%
5/1 ARM3.15%3.08%
30 yr refi4.05%3.99%
15 yr refi3.16%3.14%
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 20,624.05 4.28 0.02%
Nasdaq 5,838.58 23.68 0.41%
S&P 500 2,351.16 0.00 0.00%
Treasuries 2.42 -0.02 -1.02%
Data as of 11:08am ET
Company Price Change % Change
Bank of America Corp... 24.52 -0.06 -0.24%
Pfizer Inc 33.62 0.00 0.00%
Cisco Systems Inc 33.74 0.14 0.42%
Kraft Heinz Co 96.65 9.37 10.74%
Mondelez Internation... 42.50 -0.70 -1.62%
Data as of Feb 17

Sections

Uber's CEO has ordered an 'urgent' investigation as sexual harassment allegations by a former employee gain a big online response. More

Plenty of reporters say President Trump's White House is in 'chaos.' But there's one big thing going right for him right now: The U.S. economy. More

Trump has bought 3,643 websites -- including 93 since his presidential campaign began -- ranging from TrumpOrganization.com to TrumpFraud.org. More

Pay yourself first; donate stuff you don't need to charity and remember to claim deductions; finally, cut your recurring expenses. More