Madigan Gets Mortgage Relief for Illinois POA Homeowners

October 07, 2010

Wells Fargo & Co. has agreed to pay millions of dollars in mortgage relief to homeowners in Illinois and seven other states because of deceptive marketing done by other lenders the bank had acquired.

Wells FargoThe eight states have been investigating Wachovia Corp. and Golden West Corp. for months to see if its lenders offered payment option adjustable rate mortgages (POA) to borrowers without explaining the risks.

Also known as pick-a-payment mortgages, these toxic loans allowed borrowers to defer some of their interest payments into their principal loans, which simply increased their overall debt each month. In other words, if all they did was pay the minimum payment each month, they weren’t even covering the full amount of accrued interest.

Illinois Attorney General Lisa Madigan said that at least 531 Illinois POA homeowners will be offered loan modifications that will provide an expected $39.5 million in mortgage relief.

In addition, Wells Fargo will pay $2.2 million to the Illinois Attorney General’s office to distribute to POA borrowers who have lost their homes to foreclosure, to cover the costs of this investigation and to provide help to Illinois homeowners struggling to keep their homes.

Lisa Madigan

Illinois Attorney General Lisa Madigan

“The mortgage crisis has devastated thousands of Illinois families, leaving them struggling with unfairly high interest rates, unfair loan terms and mushrooming loan balances,” said Madigan. “Our investigation brings homeowners relief at a critical time and holds Wells Fargo accountable to struggling homeowners.”

In Illinois and the seven other states – Arizona, Florida, Colorado, New Jersey, Washington, Texas and Nevada – loan modifications are expected to be offered to 8,715 eligible borrowers, an estimated value of more than $772 million. In all, the settlement will generate more than $402 million in overall principal forgiveness.

From December 18, 2010 through June 30, 2013, Wells Fargo will offer loan modifications to qualified residential POA borrowers who are 60 days past due or facing default. Borrowers will be considered for the government’s Home Affordable Modification Program or for Wells Fargo new modification program called MAP2R.

If you are eligible to be a part of this settlement, you will be contacted.

For questions about the settlement:

*Call Wells Fargo at (888) 565-1422

*Call Madigan’s Homeowners’ Referral Helpline at (866) 544-7151

*Visit www.illinoisattorneygeneral.gov.

Categories: Mortgages

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