Wells Fargo & Co., the second largest mortgage lender in the U.S., said earlier this week that it was making changes to its lending guidelines in more than 200 housing markets spanning 24 states and Washington D.C. that it identified as either "soft," "distressed," or "severely distressed." Reuters obtained confirmation from Wells Fargo regarding the authenticity of the document circulated among brokers February 25. Blogger and mortgage broker Morgan Brown, who runs the Web site Blown Mortgage, was among the first to post a copy of a letter sent to brokers earlier this week detailing key housing markets identified by Wells Fargo as in trouble. Nearly every major county in California, according to Brown, is categorized by the lenders as "severely distressed" -- meaning any loan program in affected counties will require an additional five percent LTV contribution from borrowers for conforming product, while the maximum LTV for any non-conforming loan product (including Alt-A) will be set at 75 percent. Wells Fargo's list includes 33 markets in Florida, 20 in California, 15 each in Michigan and Virginia, 13 each in Maryland and Ohio. Many other states, including Arizona, Colorado, Connecticut, Louisiana, Massachusetts, Minnesota, New York, Nevada, New Jersey, Washington and Wisconsin had markets on the list as well, according to the Business Journal of Milwaukee. The new loan program changes will go into effect nationwide today. The changes at Wells Fargo are likely to exacerbate existing mortgage problems among borrowers, especially as more lenders and insurers pull back on lending activity in soft and distressed housing markets. Two large mortgage insurers, PMI and MGIC, both announced sweeping changes to their eligibility requirements for mortgage insurance earlier this month, with PMI requiring at least 3 percent down before any loan would be eligible for policy underwriting. Fannie Mae announced a similar policy last December, set to go into effect March 1, that restricts maximum LTV and CLTV levels to five percentage points below existing program levels. Sources have suggested that Wells Fargo's move for conforming loan products merely reflects the new Fannie policies set to go into effect, although its unclear if Fannie Mae considers the same 200+ counties to be declining housing markets. Some sources have suggested to Housing Wire that other major lenders, including Countrywide Financial Corp., will likely institute a similar policy. Disclosure: The writer held no positions in publicly-traded companies mentioned in this story when it was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.