Maryland Attorney General Douglas Gansler and ""Wells Fargo"":http://www.wellsfargo.com have reached an agreement to settle allegations that two companies Wells acquired in 2008 used deceptive practices to market adjustable-rate mortgages (ARMs).
[IMAGE]In addition to loan modifications for certain consumers, Wells Fargo has agreed to pay $940,056 to the attorney general's office for restitution to affected borrowers who lost their homes in foreclosure.
According to Gansler's Consumer Protection Division, the two companies â€" Wachovia and Golden West Financial â€" offered Maryland borrowers ""Pick-a-Payment"" mortgages without explaining to them that their minimum payments would not cover the full interest and that their principal debt would actually increase over time.
[COLUMN_BREAK]Under the terms of the agreement, Wells Fargo will consider loan modifications for Maryland homeowners who have ""Pick-a-Payment"" contracts, using the federal Home Affordable Modification Program (HAMP).
If the homeowner is not eligible for a HAMP modification, then Wells Fargo will use its own proprietary loan modification program.
According to the attorney general's office, the modifications may include principal forgiveness, loan extensions, interest rate reductions, or principal forbearance, depending upon the circumstances of the borrower.
The Consumer Protection Division plans to begin contacting consumers who have already lost their homes and may be eligible for restitution funds under the settlement.
""Especially in these difficult times, we focused this agreement on securing relief for vulnerable homeowners and those who have faced foreclosure,"" said Attorney General Gansler. ""Wells Fargo is addressing these particularly troubling issues with mortgages issued by companies that Wells Fargo acquired.""
Eleven other attorneys general across the country have reached similar agreements with Wells Fargo related to the practices employed by Wachovia and Golden West before they became part of the Wells organization.