$2 BILLION PRINCIPAL CORRECTION: Wells Fargo to Modify 14,900 Wachovia Mortgages

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EDITOR’S NOTE: The only thing new about this is that it is being announced. The banks have been correcting principal when pushed to the wall for more than three years and then burying the deal under a confidentiality agreement.

Just to help you with the math, if they are taking $2 billion off of the amount claimed as due on the mortgages (an amount that ought to be disputed) that would average around $125,000 in principal taken off each loan. So you see this isn’t all pie in the sky stuff and they wouldn’t be doing it unless they had to. And they wouldn’t be required to do so if there weren’t fatal defects in the original mortgage process and documents. Thus it is fair to say that the great likelihood is that there are millions more mortgages that would fall under similar fact patterns and that would be candidates for similar relief.

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Wells Fargo to Modify Mortgages

LOS ANGELES (AP) — Wells Fargo agreed to modify about 14,900 adjustable-rate loans made by banks it acquired, according to filings released on Monday.

The agreement with the state attorney general will result in more than $2 billion in principal write-downs, interest-rate reductions and other concessions through June 2013, said Franklin Codel, chief financial officer of Wells Fargo Home Mortgage.

The deal applies to mortgages marketed as “pick-a-payment” loans by Wachovia and World Savings Bank, a subsidiary of the Golden West Financial Corporation.

Wachovia bought World Savings in 2006, and Wells Fargo bought Wachovia in 2008.

The mortgages were so named because their terms allowed borrowers to make payments at various levels each month, including a payment option that increased the loan’s principal by covering less than the monthly interest owed.

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