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Wells Fargo to modify 15K option-ARM loans

December 21, 2010 12:49:09 AM PST
California Attorney General Jerry Brown said Wells Fargo bank has agreed to modify adjustable-rate loans made to nearly 15,000 Californians. Brown announced Monday that the roughly 14,900 modifications will be worth more than $2 billion. He says the bank also agreed to pay $32 million to thousands of borrowers who lost their homes to foreclosure.

The deal applies to so-called pay option-adjustable rate mortgages made by Wachovia Bank and World Savings Banks to allow borrowers to make payments at various levels. Wachovia Bank bought World Savings in 2006. Wells Fargo then purchased Wachovia in 2008.

Eight other states, including Arizona. Nevada, Colorado and Washington, have reached similar settlements with Wells Fargo, according to Brown's office.

California borrowers eligible for loan changes will be notified by Wells Fargo within two months.

Borrowers whose homes were foreclosured upon will be contacted during the next six months.

The Associated Press Contributed to this report.


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