“Wells Fargo is also required to pay $32 million in restitution to more than 12,000 pick-a-pay borrowers in California who lost their homes through foreclosure, plus approximately $1.8 million in costs to the state. Payments to foreclosed homeowners are expected to average more than $2,650.”
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Brown Reaches Settlement With Wells Fargo Worth More Than $2 Billion to Californians With Risky Adjustable-Rate Mortgages
LOS ANGELES – Attorney General Edmund G. Brown Jr. announced today that Wells Fargo has agreed to provide loan modifications worth more than $2 billion to thousands of California homeowners with “pick-a-pay” loans and to pay an additional $32 million to thousands of borrowers who lost their homes through foreclosure.
None of the loans were made by Wells Fargo. All were originated by World Savings and Wachovia, banks Wells Fargo acquired.
“Customers were offered adjustable-rate loans with payments that mushroomed to amounts that ultimately thousands of borrowers could not afford,” Brown said. “Recognizing the harm caused by these loans, Wells Fargo accepted responsibility and entered into this settlement with my office.”
The pick-a-pay, or pay option adjustable-rate, mortgage loans allowed borrowers to make payments at various levels. The highest level fully covered the monthly interest and principal due. Another level covered interest only. At the minimum level, payment was insufficient to cover the monthly interest owed, and the unpaid interest was added to the loan balance.
Ultimately, the loans would reset, increasing the monthly payments dramatically.
Faced with unemployment, dramatic declines in home prices, and the sharp escalation of the monthly payments, thousands of borrowers were unable to meet their mortgage payments.
The settlement with Wells Fargo covers loans made by World Savings Bank, a subsidiary of Golden West Financial Corp., and Wachovia Bank. Wachovia purchased World Savings in 2006, and Wells Fargo then acquired Wachovia in 2008.
Under the settlement, Wells Fargo will offer affordable loan modifications to an estimated 14,900 California borrowers with pick-a-pay loans made by World Savings or Wachovia. Many of the modifications will include significant principal forgiveness. The total value of the modifications mandated by the settlement is projected to be more than $2 billion.
Wells Fargo is also required to pay $32 million in restitution to more than 12,000 pick-a-pay borrowers in California who lost their homes through foreclosure, plus approximately $1.8 million in costs to the state. Payments to foreclosed homeowners are expected to average more than $2,650.
Wells Fargo has reached settlements over pick-a-pay loans with attorneys general of several other states, including Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington.
California borrowers eligible for loan modifications should get a notice from Wells Fargo within the next two months. Borrowers who suffered foreclosures should be notified during the first six months of 2011. For further information and updates, check the Attorney General’s website at ag.ca.gov.
SOURCE: California Attorney General
Don’t spend all of that $2,650 in one place now…
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4closureFraud.org
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Wells Fargo California Foreclosure Fraud Assurance Agreement
This is a joke! Central mortgage had the loan caught and slap on the wrist
Current on loan 12yrs is variable when wells Fargo was contacted they refused any assistance when told if it continues to go up I will be forced to sell or lose it their answer was yes u will. Tried doing a harp no credit needed just show of current payments? Really? After 3 months of submitting forms that they kept losing or changing them they wanted information as to why my other home was short /sale foreclosed? 2 yrs ago? Really? Declined their services so far paramount cardinal Financial wells Fargo bank of America sac dietech have all been at best refused any assistance? This is for harp? One offered to help hamp quit making payment and pay them??? Really!!! Called FTC they forwarded me to lender out of new York I am in California who just criticized my foreclosure told me had to wait 7 yrs? And no cash out loans eithet? Really it seems to me short sales were a joke all listed as fireclosure? Paying on seconds remember that yes 2 was out in first place all payments interest only into the bank’s secret account money Pitt until u could no longer afford it after rates doubled payment. I am disappointed in my favorite govenor brown he obviously had been lied to by the bank’s and believe they r going to help?
I believe this is just another fraud by Wells Fargo, I tried for over two years to get some type of modification from Wachovia/Wells Fargo but they were not interested. Then magically a little over a year ago they suddenly became interested and even hounded me to take another pick-a-pay modification that was affordable then in five years basically goes back to the original amount of payment. I turned them down twice but they kept hounding me, calling me several times a week. When I saw this settlement I thought I might get some relief, but in loooking at the settlement, I am excluded because Wells Fargo modified my loan.. I believe that they modified my loan because they knew this settlement was coming and tried to modify as many as possible to reduce the amount of the settlement.. the modification reduced my payment to $3100 per month but jumps to $4500 a month at the end of five years.. this settlement is a joke
This is good news that the Florida attorney general needs to emulate right NOW!
Best part of the article, and the one line that gives people like me hope —
“…and to pay an additional $32 million to thousands of borrowers who lost their homes through foreclosure.”
…because I am one of those millions who already suffered at the hands of the fraud that was taking place back in 2007-2008 very heavily before everyone began shining a much-needed light on it.
People like me should not be forgotten and are due compensation for all that we’ve lost! Congrats to California for being ahead of the curve on this one as usual, and may Florida soon follow. That’s all I want for Christmas and New Year’s.
From the outside this looks like a step in the right direction ….