Homeowners struggling to repay adjustable-rate mortgages from Wachovia and World Savings Bank, subsidiaries of Wells Fargo (WFC), got some good news Wednesday. The company has agreed to pay $24 million to settle allegations of deceptive marketing about the risky loans from eight states and also to forgive more than $772 million in outstanding loan balances owed by more than 8,700 borrowers.

The states' probe was spurred by Wachovia's so-called "Pick-A-Payment" adjustable-rate mortgages. Arizona Attorney General Terry Goddard, who led the investigation, said in a statement that Wachovia -- which Wells Fargo acquired after the loans were granted -- failed to sufficiently inform borrowers of the risks involved in such loan programs. Wells Fargo said it had already forgiven $3.4 billion in loans as of August.

Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington joined Arizona in investigating the company.

"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, in the statement.

Many economists blame mortgage lenders such as Wells Fargo for the housing bubble that helped lead to the recession, saying that many riskier loans -- such as adjustable-rate and interest-only mortgages -- were granted to people who couldn't afford them and ultimately lost their homes.

Of the $772 million to be forgiven by Wells Fargo, about $400 million will be in the form of principal forgiveness, while the remaining amount will come from interest-rate cuts and term extensions, Wells Fargo said. The $24 million will be used to "enlist help in customer outreach, and to prevent or mitigate the impacts of foreclosures in these communities," according to the company.


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jhonekate

Home Loan is a Secured loan offered against the security of a house/property which is funded by the bank’s loan, the property could be a personal property or a commercial one. The Home Loan is a loan taken by a borrower from the bank issued against the property/security intended to be bought on the part by the borrower giving the banker a conditional ownership over the property i.e. if the borrower is failed to pay back the loan, the banker can retrieve the lent money by selling the property.


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July 24 2013 at 1:06 PM Report abuse rate up rate down Reply
enen265

You know … in all of this I haven’t noticed anyone ask the question that should have been asked early and often. Everyone should consider all the Loan Modifications that were turned down by the Servicers because they “didn’t meet the Investor Guidelines”. If they don’t even know who the investors are …. how with a perfectly straight face, can they claim the modifications didn’t meet the “Investor Guidelines”. Well… I guess it helps to have two faces. Where are these “Guidelines”?? The Servicers wouldn’t be lying again would they? Nahhh …

October 17 2010 at 5:20 PM Report abuse rate up rate down Reply
enen265

You know … in all of this I haven’t noticed anyone ask the question that should have been asked early and often. Everyone should consider all the Loan Modifications that were turned down by the Servicers because they “didn’t meet the Investor Guidelines”. If they don’t even know who the investors are …. how with a perfectly straight face, can they claim the modifications didn’t meet the “Investor Guidelines”. Well… I guess it helps to have two faces. Where are these “Guidelines”?? The Servicers wouldn’t be lying again would they? Nahhh …

October 17 2010 at 5:20 PM Report abuse rate up rate down Reply
joeypotz

What a joke another reward for those who probably do not deserve it. How about some reduction for those of us actually paying our bills. I feel bad for the families who have lost there home undeservingly due to this hard economy, but enough already not everyone deserves to own a home the world needs renters too

October 08 2010 at 11:35 AM Report abuse rate up rate down Reply
jkennedy806

BS BS BS I have a Norwest Mortgage, it was acquired by Wells Fargo .. Just like Wachovia. Had no problems under Norwest -- have had major problems with Wells Fargo. There are 400 programs out there for the banks to choose from, and all the banks want to do is short sale, loan mod, or deed in lieu that 's it. I have a Fannie Mae and I would gladly pay the money to the Fannie Mae and leave Wells Fargo out of it as the SERVICER -- the only service I am getting from this bank is alot of lying, "Don't you want to save your house? " says the loan officer. I say yes, however, this bank doesn't want to work with it's customers. Period. I am sure that alot of homeowners would pay if the bank cooperated and followed the Consumer Protection Laws. Case in Point, haven't seen a monthly mortgage statement in 10 months.

October 07 2010 at 11:10 AM Report abuse rate up rate down Reply
ha6ai

"Principal foregiveness" is an outrage! They borrowed the money! They can argue all they want about proper disclosures concerning variable interest rates, but there is NO excuse for not paying back the money they BORROWED! The houses should be sold in foreclosure. Borrowers in states like California can simply walk away from their purchase-money mortgages, since there is no "deficiency judgment" available to the banks. But sell the houses for what the market will bear, and clear out the mess created by the Democrats. The biggest outrage is that the Democrats are now passing laws to use taxpayer money to loan these deadbeats even more - up to $50,000 of new taxpayer give-aways!

October 07 2010 at 2:27 AM Report abuse +1 rate up rate down Reply
2 replies to ha6ai's comment
spootie

the problem is my loan that was for 474k after I paid them 40k a year just over 2k a month in interest only payments. a year later my new principal is 542k and after another year I paid them another 40k but guess what now my principal is 684k. How is that fair?? WORLD set my loan up with no principal payments for ever, meaning they knew and so did my broker I would never be able to afford my loan in 2 years and by the time I figured it out it was too late to resend or sue for predatory lending which does not exist in CA. SO for me a principal reduction of 284k would be reasonable if they would modify my loan but they are unwilling as my property is worth way more at a foreclosure auction, in which HAMP will not help me because I am not underwater. It is the catch 22 in the mortgage modification your dammed if you don't make payments and your dammed if you do. I kept making my payments but they would not take them anymore because they called int he loan when it reached the 125% mark so they new from the beginning they were going to take my home from me and I had no clue for 2 years what was really going on.

October 12 2010 at 5:55 PM Report abuse rate up rate down Reply
spootie

By the way I am willing to pay my loan back but the bank won't let me. Give me a loan for 500k with my payments of PRINCIPAL and interest for 4.5% and I can afford my 2700 a month payments but the bank won't do it and no other bank will because my credit is damaged, thanks to the bank. Help me get a loan I am not willing to take on the 284k or added principal when I paid them 80k over 2 years, if a regular Joe did that to another person it would be called extortion and they would go directly to jail!

October 12 2010 at 6:02 PM Report abuse rate up rate down Reply
Susie

WOW........FINALLY........our justice system has woken up. WHAT TOOK YOU SO LONG!!!!

October 06 2010 at 10:28 PM Report abuse -1 rate up rate down Reply
2 replies to Susie's comment
jkennedy806

It's election time

October 07 2010 at 11:10 AM Report abuse rate up rate down Reply
spootie

Yes what is taking so long? why only certain states why not ALL 50 STATES?

October 12 2010 at 5:57 PM Report abuse rate up rate down Reply
DawnellDaugherty

ARM'S and Interest only's should be outlawed.I'm sure there were next to be on the chopping block after what happened to Bank Of America,and Chase.They got there money,so they don't care;the damage is already done.Bank of America has paid back their Bailout money,AIG is reportedly close as well;now it's time to give that Bailout money to the consumer!

October 06 2010 at 7:59 PM Report abuse rate up rate down Reply
1 reply to DawnellDaugherty's comment
spootie

Yes they should have never existed!

October 12 2010 at 6:03 PM Report abuse rate up rate down Reply