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Wachovia Ends Pick-A-Pay Program
Wachovia said Monday that it's immediately waiving all prepayment penalties on its Pick-A-Pay residential mortgage loans, giving borrowers more flexibility to refinance out of the controversial loans.The move affects Pick-A-Pay mortgages on one-to-four-unit residences.Wachovia also said that effective immediately it will no longer offer mortgage products giving borrowers an option of making a low payment in which the loan balance grows over time -- so-called negative amortization.Wachovia said existing pick-a-payment loans will not be subject to any other modifications.
The bank will offer loans with three payment options: an interest-only payment plan that does not reduce principal, a 30-year payment plan and a 15-year payment plan. In addition to Monday's moves, Wachovia (NYSE: WB) said over the past year it has helped about 18,000 home owners stay in their homes by making payment arrangements that were more manageable for the borrowers.
Wachovia became a major player in the mortgage business and California retail banking through its $25 billion acquisition of Oakland-based Golden West Financial in 2006. The company has branch offices and makes loans in the Sacramento region.
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