Wells Fargo Opens Loan Mods to Troubled Wachovia Portfolio

Wells Fargo & Co. announced it would open its mortgage modification program to 478,000 customers of recently-acquired Wachovia Corp. in an effort to stem a wave of foreclosures through its beefed up loss mitigation workforce.


Although the San Francisco-based company said the nearly half-million Wachovia customers - with loans totaling about $120 billion – will have access to the program, Wells Fargo admitted that it couldn’t foresee how many of those customers would take part.

"Given changing economic factors, the exact number of customers expected to be helped in this approximate $120 billion portfolio cannot be provided," the company stated.

Current customers who are in foreclosure proceedings or leaning that way have been granted an extension until the end of February in order to take part in this modification program.

The program is designed to assist customers who are currently behind on their payments or who are likely to become delinquent from preventing foreclosure and help stay in their homes.

A variety of modifications are currently provided by Wells Fargo with the objective to lower mortgage payments to a 38% debt to income ratio.

The Charlotte, North Carolina-based company, Wachovia was purchased by Wells Fargo at the end of last year after getting hit hard by the increased mortgage defaults as the housing crisis erupted.

Amid the effected loans, Wachovia’s pick-a-payment loan portfolio are included which equate to about $120 billion in option-ARMs, which is nearly 60% of its total mortgage portfolio as of June 30, 2008.

"As the 'investor' for these loans, we are rapidly designing programs to help these customers," said Mike Heid, Wells Fargo Home Mortgage Co-President.

"For those at-risk, we will offer combinations of term extensions of up to 40 years, interest-rate reductions, charge no interest on a portion of the principal for some period of time and, in geographies with substantial property value declines, we will even use permanent principal reductions."

Wells 70% success rate on their past loan modifications has prevented 650,000 foreclosures from July 2007 to November 2008.

Wells Fargo has noted they have corresponded with 94% of their current homeowners who are at least 2 months late on their mortgage payment, and that merely 30% become 3 months delinquent or more within 12 months of modifying their loan.

The loss mitigation staff at Wells Fargo has considerably increased in the past two years to 6,000 employees and Wachovia’s loss mitigation staff was at 2,000 which is more than triple from last year.

Wells Fargo has plans to make further expansion in their loss mitigation staff.

Posted on Wednesday, January 28, 2009 by admin