Wells Fargo 2008 Annual Report Download - page 10

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How we lend responsibly
Irrational lenders come and go — mostly they go! We will
stay — as we have for 157 years through virtually every
economic cycle — by lending responsibly, making high-quality
loans to good customers, helping them succeed fi nancially.
That’s why we’ve avoided most of the recent problems of the
mortgage industry. It’s why 93 of every 100 of our mortgage
customers were current with their payments at year-end 2008,
performance consistently better than the industry average.
We still make mortgage loans the old-fashioned way. We do
not underwrite a mortgage loan unless we believe the borrower
can repay it according to its terms. The loan must have a clear
benefi t for the customer such as reducing the interest rate or
monthly payment on debt, obtaining signifi cant new money,
paying o delinquent real estate-secured debt, converting an
adjustable rate to a fi xed rate, or buying a home. We want to
give customers all the information they need so they know
what they’re buying, what it will cost and that it’s right for them.
If our customers have trouble making payments, we try to
contact them early and often so we can help them make their
payments on time. Wells Fargo-Wachovia has 8,000 team
members (double more than a year ago) working just to help
these customers keep their homes. In 2008 we helped more than
a half million of our mortgage customers with loan solutions.
We were able to contact 94 of every 100 of our mortgage
customers who were two payments late. We helped more
than half of those 94 avoid foreclosure through refi nancing,
reducing payments, agreeing to new repayment plans, short
sales (the proceeds are less than what the owner still owes on
the mortgage), term extensions up to 40 years, reduced interest
rates, no interest charge on part of the principal for some period
of time and, in some markets, reduced principal — and making
sure these modifi ed loans are right for investors.
To help sustain neighborhoods, we’re selling vacant and
foreclosed properties at signifi cant discounts to new owners,
including fi rst-time homebuyers, by working closely with real
estate agents, housing nonprofi ts and city o cials. We’ve made
$33 million in grants to nonprofi t housing organizations the last
two years.
The past several years Wachovia o ered a Pick-a-Payment®
mortgage loan that allowed customers to choose from among
four payment options including a monthly payment that
may not cover interest charges, perhaps causing the unpaid
principal to increase. Wells Fargo did not o er so-called
negative amortizing loans. We’re managing the Pick-a-Payment
portfolio as a separate business unit distinct from the rest of
Wells Fargo Home Mortgage. At the end of 2008, as part of the
accounting for the merger, we charged o $22.2 billion on this
portfolio. In January and February 2009 we gave an extension
to Wachovia mortgage customers being referred to, or in,
foreclosure to give them time to contact us so we could work
with them to help them keep their homes.
Wealth Management: just the beginning
The Wells Fargo-Wachovia merger combines extraordinary
talent and resources in wealth management. We now have
16,000 fi nancial advisors managing $1 trillion in client assets
through bank, private client and independent channels. That
includes our coast-to-coast wealth management organization
with $150 billion in client assets. We provide private banking,
trust and family o ce services to a uent investors, from those
just beginning to accumulate wealth to those who have many
fi nancial services needs. We’re one of the nation’s top-seven
retirement record keepers for 3.6 million participants. We’re
also one of the nation’s largest retirement administrators and a
leading distributor of IRA and annuity products. Impressive, but
it’s just a start. We want all our wealth management, brokerage
and retirement services customers to bank with Wells Fargo.
We want all our banking customers to think of us fi rst for all
their wealth management needs. Our goal is to be the most
respected provider of wealth, brokerage and retirement services
in the United States, number one, second to none.
Wholesale Banking: the full relationship
The Wells Fargo-Wachovia merger creates what we believe
is the most comprehensive o ering of products and services
for commercial and corporate customers in the United
States. Nationwide, we’re now the #1 lender to middle market
companies ($25 million to $500 million in annual revenue),
#1 commercial real estate lender, #1 commercial real estate
broker and the #1 bank-owned insurance broker. Despite
the economic downturn, many of our best corporate and
commercial customers are receiving loans that are well-
structured with pricing appropriate for the risk. Lending is just
one part of a full-service relationship. It’s not uncommon for
many of our commercial customers to have dozens of products
“ Despite the pain of 2008, we continue to believe in the spirit,
ingenuity, work ethic, creativity and adaptability of American
workers. We’re capitalists and proud of it. We believe in free
enterprise. We’re Americans fi rst, bankers second. We’re
long-term optimists. We believe in the economic potential
of every one of our communities.”