Wells Fargo to aid Pick-a-Pay mortgage borrowers
Wells Fargo agreed to provide about $67 million in mortgage relief to up to 700 New Jersey homeowners who have so-called Pick-a-Pay adjustable-rate mortgages, New Jersey Attorney General Paula T. Dow said today.
The loans, also known as Pick-a-Payment mortgages, allowed the borrower to choose monthly mortgage payments that did not cover the interest due and, thus, caused the principal to go up, ultimately triggering a larger payment that many borrowers could not afford.
The agreement also requires Wells Fargo to pay a $3.98 million fine to settle the allegations that subsidiaries of Wachovia Corp., which it bought amid the financial chaos of 2008, failed to warn borrowers that choosing the smallest possible payment could lead to a debt treadmill.