Wells Fargo Extends Modification Access to 478,000 Wachovia Customers
Wells Fargo & Co. (WFC) said Monday it had extended access to its streamlined modification plan to some 478,000 customers of the absorbed Wachovia Corp. after the merger completed Dec. 21, 2008. The bank said it could not estimate an exact number of delinquent mortgages -- or mortgages risking delinquency -- of the approximately $120 billion mortgage portfolio. Mortgage customers being referred to foreclosure as well as those in foreclosure will receive an extension until Feb. 28 in order to work with Wells Fargo on an "appropriate" solution, according to the bank. Modifications will target a 38 percent payment-to-income ratio. “As the ‘investor’ for these loans, we are rapidly designing programs to help these customers,” said 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.” Due to a history of "responsible lending and servicing principles," 93 percent of Wells Fargo mortgage customers are current on their payments, Heid said. But the bank officials said Wells Fargo is still committed to developing programs that have delivered more than 650,000 foreclosure-prevention solutions to its customers since July 2007. Through its active outreach and education campaign, Wells said it has reached 94 percent of the customer base two or more payments past due. Approximately 70 percent of the customers it contacts actively pursues a solution; about 20 percent declines help while the remainder cannot be contacted. "Of the customers who received a loan modification, one year after the loan was modified approximately seven of every 10 of these customers were either current on their loans or less than 90-days past due," bank officials said. As proof the bank is committed to servicing these modification and workout needs, Wells Fargo reported it had increased its full-time default and home retention staff to almost 6,000 from just 125 two years earlier. "Wells Fargo will continue to further increase these teams, all U.S.-based, as demand warrants," bank officials said in the media statement. The news Wells may be hiring -- depending on whether an influx of Wachovia customers becomes enough demand to warrant increased staff -- comes as the economy grapples with rising jobless claims and the U.S. and U.K. markets shedding 76,000 jobs on Monday alone, according to a tally reported by Financial Times. Wells Fargo is the recipient of $25 billion through the Treasury Department's Troubled Asset Relief Program. Earlier this month, Wells Fargo announced it was exiting nonconforming lending through its wholesale channel due to "low market demand and higher risks," according to a statement. Write to Diana Golobay at firstname.lastname@example.org. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.