Mary Coffin, the executive vice president of loan servicing and post-closing at Wells Fargo Home Mortgage will be traveling to upcoming home preservation events in some of the more distressed areas of the country like St. Paul and Minneapolis, as well as Los Angeles, Oakland and Miami, to learn how better to underwrite customers for loan modifications.

Coffin told National Mortgage News that Wells, the country's second-biggest servicer, has been amping up its mod efforts both through the federal Home Affordable Mortgage Program (HAMP) and on its own, and has doubled its staff to do so, including hiring many former originators who lost their jobs in the market slump. But she sees local markets having a large impact on how her nationwide servicer should proceed with the flood of stressed borrowers.

"Wells is focusing much of its effort on local communities and talking with local officials. I've been spending a lot of time at the community level," said Coffin, who is based in Des Moines.

While the company continues to execute HAMP along with other modification programs, Wells is spreading the word about Leading the Way Home, a national effort that deals with everything from modifications, to property preservation, to the actual prep and selling of foreclosure properties to help stabilize and sustain these communities.

"Through the execution of the HAMP program, one thing we wanted to do was be more innovative. This is a program that requires extensive documentation. It requires an underwriting component. And what we've found with many of our customers, sometimes face to face was a more effective way of completing the paperwork, underwriting and decisioning," she said.
"That is why we launched our own preservation events. Some of the places we've already visited include Phoenix, Baltimore, Chicago and Atlanta. We're very pleased with the outcome. We've seen over 6,400 customers at the four events held so far."

Prior to these events, Wells Fargo contacts all of its delinquent borrowers in specific cities or towns. They are provided with an online capability to see what documents the lender already has and what is necessary for Wells to complete the decisioning.

"We also give them an appointment time so they don't have to wait in line," Coffin said. "It's very personalized, it's very confidential and it's very private. We have put a lot of time to make sure it's a high integrity face-to-face environment for our customers to get solutions faster."

Beginning March 1, Wells will begin instituting Wells Fargo Home Preservation Centers in 27 of the most distressed markets. This will expand its service for customers who wish to meet face-to-face to come in and talk with modification specialists by appointment.

"We have been doing this with Wachovia Pick-a-Pay customers since early in 2009 and we're expanding that now across all of our customers," Coffin said. "The combination is strong of the sites and bringing in the events across the U.S. and continuing with the other methods, which is telephone, online, door knocking and working with nonprofit counselors. The outreach is every way we possibly can to assist borrowers with the documentation requirements and underwriting requirements of the HAMP program."

In 2009, Wells completed approximately half a million modifications. A significant chunk of those came through the federal HAMP.

Through January, Wells has 137,128 active trial and completed federal HAMP modifications. This includes 17,652 that are already permanent, which is double from what the company had at the end of December.

"There is an additional 7,554 permanent modifications that are pending completion. The underwriting is completed, the documents are done and the payments have been made," Coffin said. "On top of that are 350,000 of non-HAMP modifications that we have done since the beginning of 2009. From the beginning we supported and were behind the government program but we knew it would not be the solution for all of our borrowers who were in need."

In the fourth quarter of 2009 Wells initiated three completed modifications for every one foreclosure sale on owner-occupied properties. "That's a ratio to be very proud of," Coffin said.

Almost 92% of Wells portfolio is current and just under 2% of its borrowers are in foreclosure, according to data shared by Coffin.

While the amount has decreased, Wells Fargo still has plenty of borrowers who are currently requesting a loan mod. For 2009, that percentage is sitting around 30%. These current borrowers are potentially imminent default cases. Unemployment and underemployment is fueling that, Ms. Coffin stressed.

"What people are underestimating is they see the stats on unemployment. But add to that the percentage of underemployed, lost commissions, those who lost part of their income, or they have a new job but not at the same level they used, too. You have to take that into consideration. That's where this volume is coming from."

Starting March 1, Wells will be switching back to collecting income documentation before setting borrowers in trial modifications. The government is moving to a June 1 date. "I think working with the borrower on those critical pieces of documents will help make a better decision right from the beginning of the process."

One thing that has been positive during the last year is extension of the tax credit beyond December 2009, which is helping to move a great deal of REO property.

Also, the lower interest rate is assisting Wells to refinance a significant number of borrowers into lower payments. Wells Fargo refinanced more than 1.3 million mortgage loans in 2009 through Jan. 31, bringing the total number of customers helped through refinance and modification to 1.8 million.

Wells continues to make sure HAMP comes first before offering borrowers other modification programs or foreclosure alternatives such as a short sale or a deed-in-lieu. Short sale volume doubled for Wells Fargo from 2008-2009.

"I don't know that we're anticipating that you will see that double again from 2009, but I think we'll see a steady pace of short sale," Coffin said.

She sees more servicing shops that are hiring to meet demand. From the end of 2008 to end of 2009, Wells Fargo more than doubled its home preservation staff from close to 7,500 to over 15,000.

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