Wells Fargo Joins HAMP for Second Liens
Wells Fargo (WFC) signed on to participate in the Second Lien Modification Program (2MP) under the Home Affordable Modification Program (HAMP), the company announced today. 2MP will call for modifications that reduce monthly payments on qualifying home equity loans and lines of credit under certain conditions, including the completion of a HAMP modification of the first mortgage. "The Second-Lien Modification Program offers struggling homeowners with yet another valuable option for reducing payments so they can remain in their homes," said Kevin Moss, executive vice president of Wells Fargo's Home Equity Group, in a press release. Moss added: "This program is an important component of joint industry and government efforts to bring further stability to the housing market." Wells Fargo said it already has workout programs for its home equity customers that have second liens on their homes. As of February 2010, Wells provided assistance to more than 180,000 second-lien borrowers through its internal programs, including modification and subordination. In January, Bank of America (BAC) became the first to sign a servicer agreement for 2MP participation. Until then, the HAMP program for second liens — announced in April 2009 and added to the HAMP Web site with administrative process apparently in place — had yet to result in a single servicer contract, prompting some to wonder whether the program was on hold. The Treasury Department, which administers HAMP, told HousingWire in January 2MP was still on track despite reports to the contrary. Since then, the risk that "silent" second liens pose to first lien bond holders in residential mortgage-backed securities (RMBS) has only grown louder. Investor fears culminated this month in a letter from House Financial Services Committee chairman Barney Frank (D-Mass.) urging the top four lenders to pursue “immediate steps to write down second mortgages.” Write to Diana Golobay. Disclosure: The author holds no relevant investment positons.