$2 BILLION PRINCIPAL CORRECTION: Wells Fargo to Modify 14,900 Wachovia Mortgages

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EDITOR’S NOTE: The only thing new about this is that it is being announced. The banks have been correcting principal when pushed to the wall for more than three years and then burying the deal under a confidentiality agreement.

Just to help you with the math, if they are taking $2 billion off of the amount claimed as due on the mortgages (an amount that ought to be disputed) that would average around $125,000 in principal taken off each loan. So you see this isn’t all pie in the sky stuff and they wouldn’t be doing it unless they had to. And they wouldn’t be required to do so if there weren’t fatal defects in the original mortgage process and documents. Thus it is fair to say that the great likelihood is that there are millions more mortgages that would fall under similar fact patterns and that would be candidates for similar relief.

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Wells Fargo to Modify Mortgages

LOS ANGELES (AP) — Wells Fargo agreed to modify about 14,900 adjustable-rate loans made by banks it acquired, according to filings released on Monday.

The agreement with the state attorney general will result in more than $2 billion in principal write-downs, interest-rate reductions and other concessions through June 2013, said Franklin Codel, chief financial officer of Wells Fargo Home Mortgage.

The deal applies to mortgages marketed as “pick-a-payment” loans by Wachovia and World Savings Bank, a subsidiary of the Golden West Financial Corporation.

Wachovia bought World Savings in 2006, and Wells Fargo bought Wachovia in 2008.

The mortgages were so named because their terms allowed borrowers to make payments at various levels each month, including a payment option that increased the loan’s principal by covering less than the monthly interest owed.

14 Responses

  1. We have heard that Wachovia/Wells Fargo is giving some pick-a-pay Jumbo borrowers interest rate reductions. We have perfect credit – purchased property in Ca. in 2008 for 1.6 million – put 30% down – now owe 1.2 million – property worth 925K – current rate is 7.6% – not asking for principal reduction – simply want to reduce interest rate. Very frustrated since we do not want to ruin our credit by missing payments. Any suggestions would be appreciated!!

  2. We had a fixed rate but were stupid enough to buy in 2006. We feel we are also fraud victims. We believed our house would maintain some value. All the fraudelent loans left us holding the bag. We lost our 20% down and now are 200k underwater. They can modify it or take it. Where are the principal corrections for the buyers with 20% down and fixed rates who got screwed

  3. Right. What about all of the 10 yead interest-only loans that Wells Fargo was behind in 2007 made by correspondent lenders? It should have included ALL sub-prime and interest-only loans…which, by the way, are still being offered in California.

  4. You’re right about the BS and hidden clauses in new contracts, I’d watch out for any and all “funny” wording.
    Got a new trick now being played on homeowners: A so-called, Class Action lawsuit that the Banks have set up. They contact you, tell you that you don’t have to do a thing, that they have signed you up already with a claim.
    The truth is that this “class action” is really to release them from ANY RACIAL DISCRIMINATION LIABILITIES.
    Your payment is around $200 and if you accept the money you relinquish any claims to being discriminated against!
    But the whole thing looks legit, looks like you have sued the bank, looks like you won and all you get for your “trouble” is chump change of 200.
    The reason the “winnings” are so low, is the high number of people who are in the “lawsuit”.
    It makes it look as though it isn’t worth fighting over and makes you think that something good has been accomplished.
    You have to read over the contract they send you very carefully, or better yet take it to a real lawyer to translate.
    They sent one to my sister and now she’s depressed and believes there is not point in fighting them anymore. I don’t know if she accepted the deal or not.
    Dirty, rotten, bastards, have more tricks than the devil himself!

  5. steve:

    Well I did not have any loans that were bait and switched. My customer’s got what they paid for perhaps that was because I walked each and every one through. They would not dare. I think there were some of these loans targeted to certain individuals, but not all.

  6. Joyce,

    “The pick a pay program was actually a good program if used appropriately by the borrower. Why were these selected to be resolved.”

    Yes, if the income applications were true. The so called “no doc”, Alta-A, NIVA, and Libor Option-Arms are all pick a pay loans. I believe. After the broker convinces the borrower to take the loan he or she can make it a stated income loan and double or adjust the income filing it behind the borrowers back. The bait and switch.
    So the borrower pays the neg. or interest only for a while but the problem doesn’t occur when the loan adjusts. The borrower never qualified for the loan in the first place. Any of these stated income loans offering a negative pay were designed to fail.

  7. Until the day I see, and read one of those “principal reductions” and see it recorded at the County Recorder’s Office, anything they say or “promise” it’s all a pile of hot steamy S***t!!! >These bastards thieves keep on promising all kinds of crazy crap that always turns out to be NO GOOD for the homeowners, oppppssss you don’t qualify!!!! it’s their never ending excuse 7/9 months after they make their “promises”, and i’ll tell you what, i would guarantee it if I could, there will be some BS verbiage in the “agreements” in which the homeowner will be stripped from their rights and any “future” lawsuits initiated by the borrowers. Again, until the day it happens it’s all bulls***t!!!!

  8. I hope we get some comments about this deal that the AG has cut. Surely they are going to cover others who may have had loans with WF. Now whose being selective and I don’t want to hear that most of the problems had to do with neg am loans by Wachovia and World Savings. The pick a pay program was actually a good program if used appropriately by the borrower. Why were these selected to be resolved.

    I am calling the Texas Attorney General tomorrow to check out the deal. Perhaps it is somewhere on the internet as to how they came to such a deal.

    I am not going to get a head of myself. They best have played by the rules of fair dealing and good faith as AG’s. If they did not, this will be the ultimate insult to the homeowners who were so victimized. Also, were the neg am loans sold as mbs or not? does anyone know. That will explain why they were able to cut the deal in the first place and it will also tell us if it is a “real loss” to the bank or will it be a government subsidy. WE have a right to know.

  9. So is the Calif. A G only narrowing it down to World Savings and Wachovia servicing victums. What about all the other pick a pay loans through other servicing lenders Wells Fargo is the Master servicer on my loan.

    Wells Fargo agrees to begin to modify loans? What about all those foreclosed?

  10. […] Continue reading here: $2 BILLION PRINCIPAL CORRECTION: Wells Fargo to Modify 14,900 Wachovia Mortgages […]

  11. I hope that I do not find out that the AG’s have cut a deal with Wells Fargo covering just those items above. They had no right to cut out, if they did, the other misdeeds on those homeowners who had valid claims against WF for wrong doing on even the fixed rate loans. The AG’s need to start explaining themselves to the people. Now that they have gotten our vote, we find out that some homeowenrs may be left out. I hope not. I hope the AG’s have done the right thing.

  12. These are basically the old neg am loans that were birthed in the 80’s to homeowners who had adjustable rate mortgages. No change here. The lender hung on for as long as they could before they were forced to modify those loans.

  13. leapfrog, Your not wrong. Same architect

  14. I certainly hope this comes to fruition for the homeowners involved and they get some relief. I am thinking though that there is the distinct possibility this will turn out just like the CA AG settlement with Countrywide/BOA and all the so-called mods that are handed out will be renegged upon and rescinded capriciously by the bankster. I hope I am wrong in thinking this…

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