• WPSG News at 10 PM
    10:00 PM - 10:35 PM

TRENTON, NJ (CBS) — Wells Fargo Bank will pay the State of New Jersey $4 million and adjust mortgages for nearly a thousand homeowners to resolve allegations that it deceptively marketed adjustable rate loans.

dow paula nj ag Wells Fargo Settles With NJ Over Pick A Payment MortgagesPredecessor companies that Wells Fargo acquired — including Wachovia, Golden West, and World Savings — sold thousands of so-called “pick-a-payment” adjustable mortgages, according to New Jersey attorney general Paula Dow (right):

“They quickly became in many instances delinquent loans and sometimes lost homes.”

She says the companies failed to warn borrowers that choosing the minimum payment option could lead to a “mountain of debt,” in her words, because it failed to cover the interest.   Dow says monthly payments then spiked:

“This was an outrage for consumers in a really difficult time in our nation’s history.”

As part of the settlement, Wells Fargo Home Mortgage will provide across-the-board forgiveness of accrued interest and late fees for eligible delinquent borrowers.

All told, mortgage loans will be adjusted for upwards of 900 consumers in New Jersey, totaling close to $67 million.

Dow points out that Wells Fargo never made pick-a-payment mortgages itself and the settlement was triggered by other companies that Wells Fargo had acquired.

Reported by Steve Tawa, KYW Newsradio.
Photo provided

Graphic by Ed Fischer

More From CBS Philly

Latest Videos
Latest Forecast

Watch & Listen LIVE