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Wells Fargo Will Join In Modifying Second Mortgages

wells fargo home mortgage modify second mortgages

Wells Fargo & Co. has joined Bank of America Corp. as the first two banks to sign onto the federal government’s program to modify second mortgages.

Under the government’s plan, borrowers who have been extended loan modifications on first mortgages can now apply to reduce their second mortgages.

Analysts say banks have been reluctant to adopt this part of the government’s loan modification program because they continue to hold most second mortgages and forgiving them will be costly.

The program is part of the Obama administration's mortgage modification program that is aimed at reducing monthly payments to help customers stay in their homes.

The modification program offers lenders who made "piggyback" loans - second mortgages that allowed consumers to make a small or no down payment during the housing boom - incentives to lower payments or eliminate the loans entirely. During the market's peak, even customers with spotty credit history were extended second mortgages.

By signing up for the program, all customers of Wells Fargo or Wachovia who have already modified their first mortgage through the modification program, known as the Home Affordable Modification Program or HAMP, can also modify their second mortgage.

Source: Associated Press and Realtor.org

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