The number of Atlanta foreclosed homes arising from the mortgage lending operations of Wells Fargo and acquired bank Wachovia has been curbed because of prudent lending policies and loan modification efforts by the bank, according to John Stumpf, chief executive of California-based Wells Fargo, who visited Atlanta recently and talked with Atlanta reporters.
According to Stumpf, Wells Fargo did not make pay option adjustable mortgage loans during the housing boom despite the strong clamor for option ARMs. The CEO said that because Wells Fargo stuck to its conservative lending policies and credit culture, it was not hurt as badly as the other major banks which made a lot of ARMs.
Stumpf also claimed that it has modified more than 400,000 mortgage loans this year and has been modifying about 2,000 home loans every day. He added that he and his executives are considering modifying the home loans of homeowners who are updated in their payments but are having difficulties in making their payments. The CEO explained that starting loan modification discussions before borrowers default may help prevent defaults and foreclosures.
During his visit, Stump talked about Wachovia Bank, the second biggest bank in Atlanta based on total deposits. Wells Fargo acquired Wachovia in 2008.
Although Atlanta foreclosed homes contributed to the troubles of Wachovia, bad commercial and industrial loans had a greater role in its collapse. Stumpf explained that Wachovia has been pursuing foreclosures on troubled commercial properties to enable it to move forward.
He added that the commercial property loan portfolio of Wells Fargo is among the finest in the U.S. and it is able to help Wachovia weather its difficulties. The worst loans were also written down in 2008 when Wells Fargo acquired Wachovia. But Wells Fargo still needs to monitor the commercial portfolio of Wachovia because of the soaring office vacancy rates in Atlanta.
Wachovia operates over 280 branches in Atlanta and other parts of Georgia, which will be rebranded soon after Wells Fargo completes its rebranding efforts in other states where it has fierce competition, such as in Nevada, Texas and California. In Georgia, Wachovia has been a strong brand, second only to SunTrust Banks.
Lastly, Stumpf said that he has high hopes for Atlanta. He reiterated that the quality and diversity of the workforce, the entrepreneurial spirit of residents and the location of Atlanta are positive factors for recovery and growth.
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