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NOV
12
Wells Fargo Tries Loan Exchange
By John Askins



Wells Fargo & Co. is betting on a recovery by trading in thousands of option ARMs, or so-called Pick-a-Pay mortgages, in favor of interest-only loans that defer borrowers’ balances for six to 10 years.

This allows Wells Fargo to avoid hefty write-downs on Pick-a-Pay mortgages on which it has foreclosed, but it doesn’t help strapped home owners much and it could leave the lender with billions of dollars tied up in distressed markets, economists say.

"Borrowers have the choice of defaulting, and that's what we're going to see," says Morris A. Davis, a former economist for the Federal Reserve Board who is now an urban land economics professor at the University of Wisconsin-Madison.

Source: The Wall Street Journal
Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the Houston Association of REALTORS®

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John Askins

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Welcome to Royce Realty, your source for Houston and Texas real estate. If you own property that you are thinking of selling I would be happy to provide you with a FREE Home Evaluation. If you are buyer, in this competitive real estate market, timing is everything. Many good homes are sold before...
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