Doing the right thing!

Wells Fargo pulls popular subprime loan from mix

Excerpt:

The company in an e-mail said it ended on Friday retail offerings of so-called 2/28 loans, which at 65 percent of all subprime mortgages last year are the staple of the industry. Payments on 2/28 adjustable-rate mortgages (ARM) are based on rates that are fixed for two years and then are adjusted twice a year for the remaining 28, if the loan is not refinanced.

Decisions were partly driven by the $583 billion market for subprime mortgage bonds, where sales rely on opinions of rating companies such as Moody's Investors Service, Wells Fargo said. Rating companies in the past two weeks have unleashed a flood of downgrades on subprime bonds in response to rising delinquencies and increased their assumptions of losses that new loans will produce.

"These changes are being made to align our practices with industry guidance, as well as appropriately respond to recent downgrades by key ratings agencies regarding subprime bonds," the San Francisco-based bank said in a statement. Wells Fargo Home Mortgage is in Des Moines, Iowa.


Comment: Good to see this! I favor Mortgage brokers being licensed with a license that can be revoked forever if borrowers are misdirected fraudulently. The Mortgage broker needs to have the interests of the borrower at heart! (I'm naive!)