Wachovia will waive pre-payment fees on Pick-A-Pay loans.
Negative Amortization (NegAm) Mortgage products are increasingly hot-potato like for the banks. Wachovia has hatched a plan to drop more of these mortgages and look good doing it. They announced today that they are waiving all fees associated with their Pick-A-Pay Products. It makes them look good, offering an easier way for borrowers to refinance out these loans. And it reduces their risk that comes from borrowers holding NegAm loans which draining the equity from their homes. With the economy slowing and falling property values, it is crucial that they dump as much of these kinds of mortgages as possible.
It is a savvy move to requalify their customers and get them out of these Option ARMs and into loans that can be underwritten by Fannie and Freddie. Similarly they have announced that they will no longer be offering any mortgage products that will result in Negative Amortization. Wachovia won’t be offering these products anymore, and presumably won’t be buying these as part of mortgage blocks.
Throughout the industry, people have to rethink lending practices and work more closely with borrowers to make sure they can afford their home. From mortgage brokers, who are increasingly turning to lead management software to maximize profits, to banks that are altering their lending practices, the mortgage industry continues to be in flux.
