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Wednesday, October 6, 2010

Wells Fargo settles for $24 million in Alt-A lawsuit including loan modifications

The states said loans known as option adjustable rate loans, or "pick-a-payment" mortgages, were deceptive to borrowers. Those particularly toxic loans allowed borrowers to defer some of their interest payments and add them to the principal balance. Borrowers could make payments so low that loan debt actually increased every month.
However, this came with offering private loan modifications to 8,700 borrowers worth $770 million dollars.
As part of the agreement, Wells has agreed to offer loan assistance worth more than $770 million to more than 8,700 borrowers through June 2013, though that amount will depend on how the economy fares during that time. The $24 million will be used to help states reach out to customers who took out such loans.
There is also analysis that the Alt-A loans are the new subprime
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