Wells Fargo announced today that former Wachovia Pick-A-Payment mortgage customers in California may be eligible to receive principal balance reductions for making on-time mortgage payments as part of an agreement reached with State AG Jerry Brown.
From December 20, 2010 through June 30, 2013, the total amount of relief for option arm customers could reach as much as $2.4 billion, depending on economic and individual borrower circumstances.
The bank and mortgage lender will contact customers likely to be approved for the new program via postal mail – homeowners who already received loan modifications are not eligible.
Customers can also contact the company at 888-565-1422 for more information regarding the program.
“The majority of Wachovia’s Pick-a-Payment customers reside in California,” said Mike Heid, co-president of Wells Fargo Home Mortgage, in a release.
“We’re pleased that going forward the attorney general’s office will assist with outreach, so that we can continue to work with as many customers as possible on the options available to them to prevent foreclosures.”
Wells Fargo will also contribute $33 million to the state of California to provide for customer outreach, and to prevent or lessen the impact of foreclosures in California communities.
From January 2009 through November 2010, Wells provided mortgage payment relief to more than 50,000 at-risk Wachovia Pick-a-Payment customers in the Golden State.
The modifications included mortgage rate reductions, term extensions, forgiveness on tax and insurances advances, and more than $2.9 billion in principal forgiveness.
Nine other states have already made similar arrangements with Wells Fargo, including Arizona, Colorado, Kansas, Florida, Illinois, Nevada, New Jersey, Texas and Washington.
Pick-A-Payment loans, or option arms mortgages, allow for negative amortization up to 125 percent loan-to-value, meaning many of these borrowers are now in negative equity positions, thanks in part to the steep decline in home prices.