Maryland Attorney General Douglas F. Gansler has announced that his department's Consumer Protection Division has entered into an agreement with Wells Fargo over the allegedly deceptive marketing of adjustable-rate mortgages written by Wachovia and Golden West Financial, companies that Wells Fargo acquired in 2008. In addition to loan modifications for certain consumers, Wells Fargo has agreed to pay $940,056 to the Office of the Attorney General for restitution to ‘Pick-a-Payment’ borrowers who lost their homes in foreclosure.
‘Especially in these difficult times, we focused this agreement on securing relief for vulnerable homeowners and those who have faced foreclosure,’ says Gansler. ‘Wells Fargo is addressing these particularly troubling issues with mortgages issued by companies that Wells Fargo acquired.’
According to a statement released by Gansler's office, Wachovia and Golden West offered borrowers a choice among several programs, but did not fully explain to Pick-a-Payment borrowers that one of the options was designed so their minimum payments would not cover the full interest and that their principal debt would actually increase over time.
Under the terms of the agreement, Wells Fargo will consider loan modifications using the federal Home Affordable Modification Program (HAMP) for Maryland homeowners who have Pick-a-Payment contracts. If the homeowner is not eligible for a HAMP modification, Wells Fargo will use its own proprietary loan modification program. The modifications may include principal forgiveness, loan extension, interest rate reduction and/or principal forbearance, depending upon the circumstances of the borrower, according to Gansler's office.