As many as two-thirds of borrowers facing rate increases in their adjustable-rate mortgages over the next two years will be able to get help refinancing or modifying their mortgages, starting within a few weeks, according to Wells Fargo officials.
Under the plan announced Thursday by Treasury Secretary Henry Paulson and Hope Now, an alliance of banks including Wells Fargo & Co. (WFC) and finance-industry lobbyists, borrowers with rates scheduled to adjust between January 2008 and July 2010 who are no more than 60 days late on their payments in the last year could qualify for “fast track” loan refinancing or a rate freeze of up to five years. The plan includes clear guidelines for those who qualify for assistance.
The industry estimates approximately 1.8 million people nationwide face a rate adjustment by the end of 2009, according to Mary Coffin, Wells Fargo Home Mortgage executive vice president of loan servicing.
Of those, 600,000 are already in some level of default and will be handled on a case by case basis, Coffin said. The other 1.2 million are expected to be eligible either for refinancing or loan modification under the guidelines announced Thursday.
“No borrower is left behind today,” Coffin said in a teleconference. “Every borrower can still be helped.”
Coffin said the bank would begin searching its records and reaching out to borrowers who fit the criteria for assistance, which include a low credit score, but emphasized the importance of borrowers contacting their lender promptly when problems develop. Mike Heid, co-president of Wells Fargo HomeMortgage, said the bank hoped to have the “fast-track” process available within a few weeks.