Following the Dec. 31, 2008, completion of its merger with Wachovia, Wells Fargo says it has begun to use current streamlined approaches and new customized solutions to avoid preventable foreclosures for Wachovia mortgage customers. In total, 478,000 Wachovia customers – including those with Wachovia Pick-a-Payment loans – will have access to the program, which is primarily designed for borrowers whose loans are delinquent or are likely to become delinquent.
Wells Fargo cited changing economic factors as reason why it cannot estimate how many borrowers in the approximate $120 billion portfolio will avoid foreclosure. Borrowers with loans being referred to foreclosure or that are in foreclosure will receive an extension until Feb. 28 to allow them time to contact and work with Wells Fargo on a workout option.
"As the "investor' for these loans, we are rapidly designing programs to help these customers," says Mike Heid, co-president of Wells Fargo Home Mortgage. "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."
Heid says the goal of any modification is to achieve sustainable and affordable mortgage payments, generally targeting a 38% mortgage payment-to-income ratio. The company will continue to work case-by-case with all at-risk customers to understand their financial situations to determine if lower levels may be appropriate.
SOURCE: Wells Fargo