Archive for 'Wells Fargo'

As the nation’s housing market continues to teeter, the Treasury Department on Thursday penalized three of the nation’s largest banks for subpar performance in administrating a government-sponsored program to modify mortgage loans for distressed homeowners.

As part of a new assessment of mortgage servicers, Treasury officials said they would withhold incentive payments for the three banks — Bank of America, JPMorgan Chase and Wells Fargo — until the problems are resolved. At that point, those payments would be made, a Treasury spokeswoman said.

In May, the three banks received $24 million in incentives as part of the modification program.

The Treasury Department has previously withheld payments from mortgage servicers, but Thursday’s action focused on some of the biggest players in the program. Called the Home

Affordable Modification Program, or HAMP, it is voluntary for mortgage servicers. Nearly all of the nation’s largest banks have signed contracts to participate.

The Obama administration has long been criticized as being too easy on the mortgage servicers, and Thursday’s announcement did little to quiet that criticism.

Neil M. Barofsky, who resigned in March as special inspector general for the bank bailout, described the assessments and penalties as a “lost opportunity” to hold lenders more accountable.

“It further reaffirms Treasury’s long-running toothless response to the servicers’ disregard of their contract with Treasury, and by extension, the American taxpayer,” Mr. Barofsky said in an e-mail.

Timothy G. Massad, assistant Treasury secretary, defended the approach. He said the assessments of banks and other mortgage servicers “will serve to keep the pressure on servicers to more effectively assist struggling families.”

“We need servicers to step up their performance to meet the needs of those still struggling,” he said in a statement.

The mortgage servicers were evaluated on a scale of one to three stars during the first quarter on whether they had identified and searched for eligible homeowners; assessed homeowners’ eligibility correctly; and maintained effective program management, governance and reporting.

Bank of America received the lowest grade, one star, on four of seven areas that were evaluated; Wells received one star in three areas; and Chase, in one.

A fourth mortgage servicer, Ocwen Loan Service, was also assessed as needing substantial improvement, but Treasury said it would not withhold payments to Ocwen because it was negatively affected by a large acquisition of mortgages to service.

Six other mortgage servicers were graded as needing moderate improvement. There were no servicers deemed as needing only minor improvement.

Wells Fargo issued a statement saying it was “formally disputing” the Treasury’s findings.
“It paints an unfairly negative picture of our modification efforts and contradicts previous written assessments shared with us by the Treasury,” said spokeswoman Vickee J. Adams, who said the criticisms were dated and did not reflect recent improvements.

Chase said it too had made significant improvements. “The bank respectfully disagrees with the assessment,” the company said in a statement.

Dan B. Frahm, a spokesman for Bank of America, said that the bank was “committed to continually improving our processes to assist distressed homeowners” through the federal modification program and its own internal program. But he added, “We acknowledge improvements must be made in key areas, particularly those affecting the customer experience.”

The modification program was created using $50 billion that was set aside from the bank bailout to help distressed homeowners. The idea was that the Treasury Department would provide incentives to mortgage servicers and investors to modify mortgages for struggling homeowners, rather than foreclose on them.

The administration predicted that three million to four million Americans would benefit, but so far, only 699,053 permanent modifications have been started.

To date, Treasury has spent about $1.34 billion on HAMP. One problem was that the mortgage servicers, at least initially, were not prepared to handle the onslaught of modifications, and homeowners complained that paperwork had been routinely lost and trial modifications had dragged on for months.

by Andrew Martin with New York Timeshttp://www.nytimes.com/2011/06/10/business/10hamp.html?_r=1

Wells Fargo, one of the nation’s biggest banks and the largest consumer lender, said Wednesday that its fourth-quarter earnings rose 21 percent, helped by an improving loan portfolio and withdrawals from its capital reserves.

The bank, which is based in San Francisco, earned $3.4 billion, or 61 cents a share, in the fourth quarter, up from $2.8 billion, or 8 cents a share, in the year-earlier period, matching analysts’ forecasts. For the year, Wells Fargo reported net income of $12.36 billion in 2010, compared with $12.28 billion in 2009.
The bank’s full-year revenue fell to $85 billion, however, from $88.7 billion in 2009, as new federal regulations limited the overdraft fees that banks can charge on checking accounts.
Still, compared with the third quarter, the bank generated revenue growth in roughly two-thirds of its businesses.
“As the U.S. economy showed continued signs of improvement, our diversified model continued to perform for our stakeholders, as demonstrated by growth in loans and deposits, solid capital levels and improving credit quality,” John G. Stumpf, the bank’s chairman and chief executive, said in a statement.
Despite its heavy hand in the lending industry, which has been hit by losses for three years,

Wells Fargo has quietly emerged from the financial crisis as one of the nation’s strongest banks.
The report from Wells is an important step for the bank as it looks to increase its dividend, which has been stuck at 5 cents for nearly two years.
Wells Fargo Press Release
When the financial crisis struck, Wells, JPMorgan Chase and other industry giants cut dividends as they moved to bolster their capital. Now, two years later, banks are eager to give money back to shareholders — if the government will let them. The Federal Reserve must first complete a second round of bank stress tests, whose results are expected in March.
JPMorgan, which last week reported a $17 billion profit for 2010, has said it hopes to raise its dividend as much as a dollar in the coming months.
Wells Fargo has been more coy about its plans. Mr. Stumpf, in a conference call with investors, said he was eager to raise the dividend.
But Brian Foran, a senior bank analyst with Nomura Securities International, noted, “They historically have been cagey about saying anything before they know it.”
The bank’s dividend outlook has improved on the back of its lending operation.
Wells Fargo picked up new borrowers in the fourth quarter, particularly businesses, and it released $850 million from its reserves, thanks to the improving loan portfolio.
The bank’s provision for credit losses was cut nearly in half, to $2.99 billion in the fourth quarter from $5.91 billion a year earlier.
Shares of Wells Fargo fell 68 cents, or 2.1 percent, on Wednesday, closing at $31.81.
Although the bank’s mortgage shop reported a 19 percent drop in income from 2009, it originated $128 billion in home mortgages in the fourth quarter, up from $94 billion in the fourth quarter of 2009.
“You can see the momentum building as economic activity is returning,” said Marty Mosby, a managing director at Guggenheim Partners.
Yet Wells Fargo still faces problems surrounding its mortgage portfolio.
On Jan. 7, the highest state court in Massachusetts ruled that Wells Fargo and US Bancorp had wrongly foreclosed on two homes, because they could not prove they owned the mortgages.
Regulators in all 50 states have begun investigations into whether hundreds of thousands of foreclosures made in recent years were invalid.
Some banks temporarily suspended foreclosures last year during the controversy.
Wells Fargo officials say they have largely avoided the documentation problems and have decided not to halt foreclosures.
“At the end of the day, the litigation will be less of an impact on Wells Fargo than people fear,” said Lawrence Remmel, a partner at the law firm Pryor Cashman, where he leads the firm’s banking and financial institutions group.
Wells Fargo has also moved to distance itself from litigation over soured loans that banks securitized and sold to investors.
Fannie Mae and Freddie Mac, the government-controlled mortgage finance companies, are demanding that Wells Fargo and other big banks buy back loans sold at the height of the mortgage bubble.
In the fourth quarter, the bank recorded a $464 million provision for future mortgage repurchases, up from $370 million in third quarter.
But the bank’s chief financial officer, Howard I. Atkins, said Wednesday that Wells Fargo did not plan to settle its dispute with Fannie and Freddie. Mr. Atkins said the bank’s mortgage securities were of higher quality than those generated by its competitors.
“This is a diminishing issue, not an increasing issue,” Mr. Atkins said in an interview.
Eric Dash contributed reporting.
By Ben Protess
For more: http://nyti.ms/eP7Rd8
Bank executives who were hoping for a quiet end to this fall’s controversy over irregularities in the foreclosure process are facing a new threat: state judges. 
 
The chief justice of New Jersey’s Supreme Court, Stuart Rabner, announced Monday that the state’s courts would stop foreclosures by big banks if they cannot show they’re following state law when foreclosing. 
 
Rabner made the announcement after assigning a judge to oversee foreclosure matters. That judge, Mary C. Jacobson, issued an order Monday requiring six banks – Ally Financial, Bank of America, J.P. Morgan Chase, Wells Fargo, OneWest Bank and Citigroup – to appear in court and explain why she shouldn’t suspend foreclosures. 
 
The New Jersey action stems from the controversy over questions surfaced over the legality of documents submitted to courts in foreclosure proceedings. 
 
"Today’s actions are intended to provide greater confidence that the tens of thousands of residential foreclosure proceedings underway in New Jersey are based on reliable information," Rabner said in a statement. "Nearly 95 percent of those cases are uncontested, despite evidence of flaws in the foreclosure process." 
 
The six banks must by Jan. 19 show the court why it should not suspend foreclosures. The order said the banks were chosen "based on a public record of questionable practice." 
 
Only one bank would comment on Monday. Mark Rodgers of Citigroup said the bank would review the judge’s order and ensure that it is in compliance. 
 
Banks are expected to argue that problems in the foreclosure process have been minor and the vast majority of those facing foreclosure lost their homes because they didn’t pay their mortgages for many months. 
 
They’re also likely to say that a protracted freeze in foreclosures could have a negative effect since it would keep those vacant homes out of the market. 
 
But homeowner advocates and others will likely argue that banks’ problems with following the letter of the law in foreclosure proceedings reflect a range of harmful practices that have hurt borrowers trying to avoid foreclosures. 
 
 
By Zachary A. Goldfarb 
For more: http://wapo.st/gxhd7G

 Wells Fargo said that current reviews found that bank employees had failed to “strictly adhere” to its required procedures during a final step in its documentation processes. It also acknowledged that “some aspects of the notarization process” had not always been properly followed, creating the potential for paperwork errors.

 
After several weeks of insisting its foreclosure processes were sound, Wells Fargo & Company said on Wednesday that it planned to correct and resubmit up to 55,000 improperly filed documents by mid-November.
 
Wells Fargo said that current reviews found that bank employees had failed to “strictly adhere” to its required procedures during a final step in its documentation processes. It also acknowledged that “some aspects of the notarization process” had not always been properly followed, creating the potential for paperwork errors.
 
Wells officials said that the bank started to correct the 55,000 questionable files, and “out of an abundance of caution,” planned to resubmit them in 23 states where foreclosures require court approval. Bank officials maintained that the underlying information in the loan files was accurate and that the bank had not improperly foreclosed on any troubled homeowners.
 
Wells Fargo also said that it had no plans to temporarily freeze foreclosure sales, an action previously taken by its rivals Bank of America and GMAC.
 
Still, the revelations that Wells had identified as many as 55,000 improper foreclosure files add to the mortgage morass. Attorneys general in all 50 states are conducting a sweeping investigation into the industry’s practices, while a White House task force and several federal regulators have embarked on similar reviews.
 
In addition to Wells Fargo, four other large mortgage players are resubmitting tens of thousands of cases in large swaths of the country. Chase said it was looking at about 115,000 files in 41 states. Bank of America is looking at 102,000 in 23 states, where foreclosures require court approval. GMAC and PNC Financial have come forward to say they are resubmitting files with improper paperwork, too.
 
Still, Wells Fargo’s announcement was the second time a bank had backtracked on statements it had made about the extent of its foreclosure problems. After weeks of insisting that its review had not turned up any serious errors, Bank of America acknowledged a number of paperwork errors, including incorrect data and misspelled names.
 
Wells Fargo had previously taken an even more combative stance. In its Oct. 20 conference call with investors, bank officials said they were confident that the foreclosure processes and controls were sound. That statement gave the impression that there were few if any problems but left room for the possibility that the bank might have to fix a small number of mistakes.
 
During the conference call, Wells officials dismissed concerns that the bank had systematically engaged in so-called robo-signing, where a single employee would sign thousands of loan documents without verifying their contents, as the law requires. Instead, the bank emphasized that their policies called for the same employee who compiled the foreclosure file to sign off on it — a crucial legal requirement in many states.
 
But revelations in an obscure Florida lawsuit and elsewhere raised concerns about whether that process was always followed. Under questioning, Xee Moua, a Wells Fargo manager, said she would sign off on as many as 500 foreclosure files a day without verifying the accuracy of their contents. “We don’t go into the details with these affidavits,” she said in a deposition.
 
Oscar Suris, a Wells Fargo spokesman, declined to comment on whether any of the problems the bank identified stemmed from such violations. He previously called Ms. Moua’s testimony “one isolated case” that is being disputed in the courts.
 
Wells officials also acknowledged the possibility of notarization errors. Previously, Wells officials said they believed that their notarization procedures complied with the law in South Carolina, where the bank’s loan foreclosure operations were based. As a result of the reviews, bank officials now say they are taking into consideration the unique requirements of different counties and states.
 
By ERIC DASH
For more: http://nyti.ms/bs89x7

 Wells Fargo will not join BofA in foreclosure suspension

Wells Fargo will not suspend foreclosures and stands by the accuracy of its affidavits, Jason Menke, a spokesman for the San Francisco-based bank, told HousingWire.

 

For more: http://bit.ly/dfmOL5

Check this out. Wells Fargo pays $24 million to eight states to stop investigation. These funds, apparently given to each state, will be used to "reach out" to help customers. I wonder how many customers they "reach out" to will be "tax-eaters" and how many will be "tax-payers."   Stay tuned.

$24 Million Payment to End Wells Fargo Inquiry

By THE ASSOCIATED PRESS
Published: October 6, 2010
 
WASHINGTON (AP) — Wells Fargo & Company is paying $24 million to end an investigation by eight states into whether lenders acquired by the bank made risky mortgages to consumers without disclosing their perils.
 
The states said loans known as option adjustable-rate loans, or pick-a-payment mortgages, were deceptive. Those loans allowed borrowers to defer some interest payments and add them to the principal balance. Borrowers could make payments so low that loan debt each month.
 
Wells Fargo announced the agreement Wednesday with attorneys general in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington State.
 
The loans were made by the Wachovia Corporation and a California company it acquired, World Savings Bank. Wells bought Wachovia at the end of 2008. Wachovia had already stopped making those loans before that acquisition.
 
As part of the agreement, Wells has agreed to offer loan assistance worth more than $770 million to more than 8,700 borrowers through June 2013, though that amount will depend on how the economy fares. The $24 million will be used to help states reach out to such customers.
 
The agreement includes no admission of wrongdoing by Wells Fargo.