Monday, December 20, 2010
Attorney General Jerry Brown's office reports the settlement covers thousands of Californians with so-called "pick-a-pay" or adjustable rate mortgages which ballooned to unaffordable levels.
Wells Fargo didn't originate any of the loans in question; they were made by World Savings and Wachovia, which Wells Fargo acquired in 2006 and 2008 respectively.
"Recognizing the harm cause by these loans, Wells Fargo accepted responsibility," Governor-elect Brown says in a statement.
Under the settlement agreement, nearly 15,000 people will be offered loan modifications; the company will reduce the principal on some of them. Wells will also pay restitution—expected to average about $2650— to more than 12,000 adjustable rate mortgage borrowers who have lose their homes to foreclosure, as well as $1.8 million in costs to the state.
Eligible borrowers can expect notices from Wells Fargo within two months, according to the AG's office. Foreclosed homeowners should notified during the first half of 2011.
Additional information is available on the AG's website at ag.ca.gov