The FINANCIAL -- Wells Fargo & Co. announced , on 9 February, that the company has finalized an agreement with attorneys general from 49 states and several federal agencies regarding mortgage servicing, foreclosure and origination issues, from Wells Fargo.

Under the terms of the agreement, Wells Fargo has made a financial commitment covering expanded refinance, modification and other customer relief options, and will implement comprehensive servicing standards. Four other large mortgage servicers also have reached agreements with the states and federal agencies.

As part of the agreement, the participating attorneys general and federal agencies have agreed to release Wells Fargo from claims and allegations pertaining to servicing, modification and foreclosure practices, and also for certain claims related to the origination of mortgage loans.

The expanded refinance and consumer relief programs will be available starting March 1. Customers who may qualify for a refinance under the expanded refinance program will be sent letters in the weeks following March 1, and borrowers who may qualify for the expanded modification program will be contacted through Wells Fargo’s ongoing outreach to borrowers facing payment challenges.

Wells Fargo provided information about the anticipated financial impact of the commitments under the agreement. As of December 31, 2011, the company had fully accrued for the Foreclosure Assistance Payment. Similarly, as of December 31, 2011, the expected impact of the Consumer Relief Program was covered in our allowance for credit losses and in the non-accretable difference relating to our purchased credit-impaired residential mortgage portfolio.

The Refinance Program will not result in any current-period charge as the impact of this program will be recognized over a period of years in the form of lower interest income as qualified borrowers benefit from reduced interest rates on loans refinanced under the program.

Wells Fargo’s ongoing efforts to assist customers have produced significant results. Between January 2009 and December 2011, the company refinanced more than 3.3 million borrowers and provided trial or completed modifications for more than 728,000 customers. The modifications Wells Fargo has made included up-front forgiveness of $4.1 billion in mortgage principal and an additional $0.8 billion in forgiven principal that borrowers can earn by keeping up with their payments over the next three years.

Among the changes it already has made in line with the servicing standards, Wells Fargo has adopted a Single Point of Contact service model for customers who are pursuing a loan modification or working with us to sell their home and avoid foreclosure. In addition, the company has implemented a number of quality assurance, vendor management, and reporting and measurement changes.

Related Stories

• Kazakh city of Aktau to modernise heating
• Western Union Highlights Strategic Initiatives at 2012 Annual Stockholders' Meeting
• Growth in Developing East Asia and Pacific Is Strong But Slowing