Wells Fargo Settles Mortgage Claims

Wells Fargo agreed to pay $24 million to eight states and $772 million in loan modifications to settle charges that various companies it had acquired marketed adjustable rate mortgages deceptively to consumers. The eight states claimed that Wachovia Corporation, which purchased World Savings Inc and was then in turn acquired by Wells Fargo, failed to inform consumers about the dangers of adjustable rate mortgages, and that the low payment options of these special mortgages would in time rise when monthly interest was factored in.

As a result, the states claim this misleading marketing lead to defaults and foreclosures. The individuals least able to afford home mortgage loans were therefore sold these loans on a deceptive basis.

The states included in the settlement were Arizona, Colorado, Florida, Illinois, Nevada, Texas, California and Washington. The $24 million payment will be used to help the states with customer outreach and to prevent or lessen the impact of housing foreclosures in their communities.