Wachovia plans to take a closer look at loans originated by mortgage brokers via its wholesale channel, according to a memo sent to brokers dated June 11.
While the memo calls the policy change “enhanced customer service,” it’s clear that Wachovia is stepping up efforts to ensure loans originated under historically higher-risk channels are more closely monitored.
So beginning June 16, Wachovia representatives will contact all “Portfolio” loan applicants whose applications were submitted by mortgage brokers.
Borrowers will be asked to complete a “Wholesale Initial Service Call Questionnaire“ aimed at providing greater transparency and a better understanding of loan terms.
Through a series of questions asked during the phone call, Wachovia intends to make sure that the customer understands the broker relationship and the fact that a loan has been submitted on their behalf.
The questionnaire will also tackle key features tied to the company‘s option arm loan program, the so-called “Pick-a-Payment“ that tends to confuse even those selling the product.
Rather surprisingly, the controversial loan program with ultra-low mortgage payments has been advertised by Wachovia on national television as recently as March, despite the elevated delinquency rate.
The phone calls, which will be automatically conducted upon receipt of a portfolio loan application, appear to be part of the bank‘s renewed efforts to mitigate risk amid hefty losses and the departure of their CEO Ken Thompson.
Could this be the start of a new trend? And if so, will it actually be effective?
Shares of Wachovia were up 20 cents, or 1.05%, to $19.17 in late trading on Wall Street, slightly above their recent 52-week low of $18.22.