Wells Fargo Emphasizes Its Commitment to Responsible Lending and Servicing

Division President Cara Heiden Appears Before House Financial Services Subcommittee

Speaking at the invitation of the House Financial Services Subcommittee on Financial Institutions today, Cara Heiden - division president of Wells Fargo Home Mortgage - articulated Wells Fargo’s commitment and proven excellence in fair and responsible lending and servicing.

“It is critical that mortgage lenders and servicers live by principles that eliminate troublesome practices and help consumers through challenging times,” Heiden said. "At Wells Fargo, our fair and responsible lending principles are not viewed as policies by which we have to abide - but instead are the moral fabric upon which our business operates.

“We are committed to the lifetime customer relationship,” Heiden added. “Our vision is to help consumers achieve financial success, and this includes treating nonprime borrowers fairly and responsibly. We look forward to continuing to work with all the participants in the housing finance industry to find more solutions that benefit consumers - expanding homeownership and preserving it.”

Heiden was invited to testify before the House subcommittee due to Wells Fargo’s industry-leading performance in mortgage lending and its industry-recognized results in servicing customers.

Heiden noted during her testimony that Wells Fargo has a series of long-standing responsible servicing practices that serve the needs of its customers and investors. Those practices include proactively contacting customers in default and working with them to identify solutions that not only keep them in their homes but also protect their credit. She highlighted several additional principles under which Wells Fargo operates:

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* Approving applications for loans based on the borrower’s ability to repay;

* Providing consumers with information to make fully-informed decisions about loan terms;

* Not making pay option ARMs or negative amortization loans;

* Having controls to ensure that first mortgage customers are offered prime pricing options when they qualify based on their credit characteristics and the terms of their loan transaction;
* Advising customers of the availability of loans without pre-payment fees and limiting fees to the lesser of three years or the fixed term of an adjustable rate loan;
* Making loans that offer a demonstrable benefit to the consumer, such as reducing the monthly payment on debt, obtaining significant new money, or purchasing a home.

“Most customers never miss a payment, but for those who do, we have experts dedicated to working with them early, often, and typically up to the actual point of foreclosure. In addition, we work extensively with local organizations and credit counselors that provide assistance to borrowers,” Heiden said.

In addition, Heiden discussed Wells Fargo’s innovative Steps to SuccessSM program which launched in mid-2006. This free program provides those enrolled with financial education, the means to be more familiar with credit reports and information about banking products that can help make money management routine and effective. Since its inception, more than 30,000 consumers have joined the program.

Capital markets expert Lew Ranieri recently said of Wells Fargo: “If the industry had followed the same kind of fair and responsible lending and rigorous servicing practices that Wells Fargo did, the industry would be in far better shape today.” Ranieri is viewed as an innovator in the mortgage industry.