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Posts Tagged ‘wachovia’

Wachovia Bank Losses Forces Game Playing

Wachovia today reported losses of over $8 Billion, well beyond any analyst’s expectation. With most of Wachovia’s losses coming from the mortgage market, which I would assume was made even worse by the purchase of Golden West and the Pick A Payment loan program, Wachovia is scrambling to prevent being a lame duck ripe for a takeover.

Right now they need to make their shareholders feel confident that Wachovia can turn this ship around quickly. So what do they announce? Wachovia is withdrawing from the wholesale mortgage business and will no longer do business with mortgage brokers. (Really? Did they really?… we’ll explore that more in second.)

The idea here is that since mortgage brokers have been unfairly held repsonsible for the entire mortgage snapfu that we are in, why not seperate themselves from the “evil mortgage brokers” and show investors that they have made major changes! This will allow them to put on a show to their shareholders to make them feel a little better about the major losses.

But this show is really just smoke and mirrors. Read the rest of this entry »

No More Pick a Payment for Wachovia

It appears that Charlotte NC based Wachovia could no longer handle the negative press. They have officially dropped the Pick A Payment product from their mortgage portfolio. After spending all the time and money in buying (and defending the purchase of) Golden West Financial, they are now stuck with nothing more than a less than stellar return on the investment.

Wachovia has taken a beating on this product. While the “option arm” mortgage product is not a bad product when sold correctly to the right borrower, the way this was sold and the pressure Wachovia put on its loan officers to push this product really gave it a bad image. This image was one that Wachovia could not overcome, mainly because they never changed how they sold it!

So for now, Wachovia has dropped the Pick a Payment mortgage loan. In my opinion, this is actually good for consumers. While a good mortgage option for a select few, too many potential borrowers were being pushed to look at this loan even if it didn’t make sense for them. Now, with it no longer offered, Wachovia can push their borrowers towards less risky loans. But expect that they will still push. Their loan officers are paid on the types of products they sell and if they hit their quotas for each product. So while a 30 year fixed may be your best bet, your Wachovia loan officer may well still push you towards a 5 year adjustable because they need to sell 3 more of those this month.

When considering mortgage options, you really should look to a licensed mortgage professional that focuses on what best fits your needs, not the bank’s needs. The Carolina Mortgage Connection does not have any quotas to hit, and we only focus on the right solution to match with your needs and goals.

This past Thursday, I was interviewed by Julie Rose, reporter with WFAE 90.7 FM, an affiliate of NPR (National Public Radio) here in Charlotte NC. Julie Rose was doing a story on Wachovia’s Pick A Pay mortgage loan and wanted to ask me some questions. Seems she has been reading Charlotte Home Mortgages as well (good for her!) and felt I might know something about this…

Recently Wachovia has been coming under fire for the Pick A Pay mortgage loan. Recently it was reported that Wachovia was really putting pressure on their loan officers to push this product, even if it wasn’t what a borrower wanted to needed. (read Wachovia Pressures Loan Officers)

An exceprt from Julie’s report as found on WFAE’s website:

This week Wachovia started a new policy of calling every customer who applies for one of its controversial Pick-A-Payment loans through an independent broker.  The bank says it wants to enhance customer service and prevent fraud.  But there could be another reason.  WFAE’s Julie Rose reports.

As you can hear in the audio clip, my sound bite was small. As such, the point I made with Julie was cut short (however, it was not taken out of context - great job Julie!) The point I was making was that wholesale lenders calling mortgage broker’s clients is not the norm. Yet I could see why Wachovia may be doing it, if for no other reason than to help the public relations nightmare that Wachovia is dealing with over the Pick a Payment loans.

The Pick A Payment mortgage loan was not a horrible mortgage product IF it was sold properly. These types of mortgage products were offered by a large group of lenders. However, it was sold as a way to get a super low payment to anyone that wanted it. While it did provide options for a low payment, that was not the only consideration for that mortgage product. If the borrower had good equity that could handle the negative amortization AND planned on applying the savings from the mortgage payment to something more beneficial (such as debt elimination or wealth building investments), then it could be a good mortgage. Regardless, the borrower that best fit this mortgage loan was your saavy investor or seasoned home owner. This loan was sold to too many first time home buyers just looking for the lowest possible payment. And now we have major fall out.

Anyway, thanks Julie Rose for taking the time to call for an interview. Feel free to call again if I can help!