Thank you for the opportunity to come before this Subcommittee today to discuss our continued commitment to doing everything we can to prevent avoidable foreclosures and to help stabilize the housing market. Wells Fargo may be a big corporation, but we operate with the conscience of a company determined to do what is right for our customers, our investors, and for all American taxpayers.
Since we last came before this Subcommittee in February, much has changed and evolved in our economy and in our efforts to assist struggling borrowers.
- First, we worked hard to implement the very detailed and evolving Home Affordable Modification Programs which include different guidelines and requirements for Fannie, Freddie, non-GSE, and most recently FHA borrowers.
- To handle the greater than 200 percent increase in borrowers requesting assistance – including the 35 to 40 percent who are current on their mortgages – we have hired and trained an additional 4,600 U.S.-based home retention staff for a total of more than 12,000.
- As of September 3, we have qualified more than 304,000 customers for trial and completed modifications this year alone. As it pertains specifically to HAMP, we have offered 78,000 customers a trial modification and we have received at least the first payment for about 44,000 of these trial modifications.
- We have further enhanced our support systems, our training and our re-training to aide our service representatives in appropriately communicating modification programs and guidelines as they continue to change and expand to help more borrowers.
- In addition, we have improved the ways we obtain from borrowers the extensive documentation the government requires for its programs, and we continue to work to ensure all documents are processed in a timely manner.
- To this point, we have asked the Treasury to meet with us tomorrow to discuss challenges with the Home Affordable Modification Programs, and opportunities to make them even more effective.
- And, most importantly, in this dynamic environment we continue to conduct final reviews to ensure every option is exhausted before a property moves to foreclosure sale – because when a foreclosure occurs everyone loses.
Wells Fargo has long adhered to responsible lending and servicing principles that guide our business practices. We did not make negative amortizing, pay option adjustable rate mortgages or subprime stated income loans, despite their popularity. And, as a result, we can directly attest to the fact that the home loans our company originated perform better than those loans we service but had no involvement in originating or underwriting.
Despite widespread decreases in home values, more than 92 percent of our customers in our entire servicing portfolio remain current on their mortgage payments. This is the direct result of our customers’ efforts and our commitment to responsibly service all of the loans in our portfolio – including those formerly owned by Wachovia and loans we service but did not originate.
In addition, our delinquency and foreclosure rates continue to be significantly lower than industry average, and the lowest of the nation’s largest mortgage lenders. And, for all of 2008 and 2009 year-to-date, less than 2 percent of the owner-occupied properties in our servicing portfolio have actually proceeded to foreclosure sale.
These results would not have been achievable without the continued collaborative public and private sector efforts to inform customers of their options and the introduction of the new Home Affordable Modification Programs.
While we are proud to have been part of HAMP’s development – as it is an important option – it needs to be acknowledged that HAMP will not help all borrowers in need of payment relief. For the customers who are ineligible for HAMP and where we can reach affordability, we offer customized solutions. During June, July and August – the same time we fully executed HAMP – more than 83% of our customized modifications reduced payments. Where payments stayed the same or increased, the customer did not have a permanent hardship, could afford their monthly payments, and needed short-term assistance to take care of their delinquency – or there were investor restrictions.
Wells Fargo is a company committed to doing what is right for our customers. To that end, I have personally spoken with many of our borrowers to better understand their situations and experiences with Wells Fargo.
These discussions have reinforced for me how many Americans are struggling with changes in their personal and financial circumstances including unemployment and under-employment. I also learned how much they are struggling with the various program requirements and documentation. And, in the past six months some customers have been challenged with getting clear, timely communication from us as the guidelines and the requirements for the various programs have continued to change.
We hold ourselves to a high level of accountability for improving communication and returning all of our customers to the level of service they deserve.
As servicers, we sit between the customer and investor and we are responsible for doing modifications the right way. We also have a responsibility to execute these programs well for all American taxpayers, by ensuring that customers given modifications are truly facing hardships and that they can afford and sustain their home payments after a modification is completed.
In closing, as we have from the very beginning of this crisis, Wells Fargo will continue to seek innovative ways to address the evolving challenges facing our nation. We continue to have faith that together, we will help the nation turn the corner and return the housing market and our economy to a state of health.
Thank you, I look forward to your questions.