I am like many of you who have been dismayed on how our banking institutions nearly ruined not only the economy here in the U.S., but also of the world. What is even more disturbing is that none of the people who caused the banking crisis nor the crisis on Wall Street, have been brought to justice. It is also amazing that the U.S. taxpayer is picking up the tab for the outrageous loan scandals that have occurred including this novel approach called ‘Pick-A-Payment’ Mortgage.
The borrower was given the option on how they wish to be taken advantage of. The lender would offer some attractive loan payments, in which the unpaid load interest was added to the end of the loan. This permitted borrowers who other wise would not qualify to obtain a loan that they could not afford. The banks and mortgage companies, who deny any wrong doing, are:
The Defendants include: World Savings, Inc.; World Savings Bank, FSB; Wachovia Mortgage, FSB, now known as Wachovia Mortgage, a division of Wells Fargo Bank, N.A.; Wachovia Corporation; Golden West Financial Corporation; Wachovia Bank, FSB, formerly known as World Savings Bank, FSB-TX; Wachovia Mortgage Corporation; Wells Fargo Home Mortgage; and Wells Fargo Bank, N.A.
The lawsuit claims that the Defendants violated various state and federal laws in connection with the Pick-a-Payment mortgage loan product. The Pick-a-Payment mortgage loan permitted the borrower to select and make a minimum payment amount for a limited time and subject to certain conditions. When a payment was insufficient to pay the interest owed, unpaid interest was added to the loan balance and the outstanding loan balance increased (“negative amortization”). The Plaintiffs claim that the Defendants did not adequately disclose the Pick-a-Payment loan’s potential for negative amortization.
The Defendants deny all claims made against them, deny that their lending practices violated any laws, and deny that they financially harmed any of their customers.
I believe that the borrowers are entitled to compensation, but what about us taxpayers? We are letting these people get away with financial theft by slapping their wrists.
When are we going to hold these people responsible for their actions? Or have they contributed so much money to the politicians that it places them above the law?
Is it just me, or do others of you who read this find it hard to believe?
It is a joke. I received the class action settlement and called. Here’s how it goes: They have 15 million dollars to ‘settle’ with. They have 517,000 poor souls who got sucked into the pick a pay mess. Do the math.
Hello Mary,
WOW! You may be able to go out for dinner. Nothing too fancy, maybe just McDonald dollar menu.
Hi, Ron:
Yes, indeed! Also $127,000 goes to the lawyers!
Hi Mary,
Of course, we don’t want to forget the hired guns! LOL
$127,000.00 goes to the 29 original plaintiff’s the Lawyers get $25 mill of the $50 mill. settlement.
I had one of these loans and I knew full well about the (“negative amortization”). But when your desperate you do strange things.
Hi Pete,
Thanks for the info.
Your have my sympathies, Pete. I know all about that desperation. Good luck to you and all who got scammed by World Bank/Wachovia.
I was also someone named in the class-action. I won’t be filing a claim though, because I don’t think the bank did anything wrong.
I was given all the info, and told of the warnings of negative amortization. But I needed the loan badly, to try to keep my family’s house in my name. So I took the loan, because no one else was willing to give me one.
There were stipulations of the loan, (e.g., pre-payment penalites) that I thought were way too far to the bank’s advantage, but I knew of them when I signed on, and I agreed to them.
I think the biggest problem here is the average person is too unintelligent to understand paperwork, so when the ramifications their signing come due, they claim they were scammed.
Also, too many people are way too willing to jump on the bandwagon when the chance comes to sue somebody.
The $25 million for attorney fees does NOT come out of the $50 million settlement. There is a pool of $600 million for loan modifications as well…but the poor stiffs still have to “qualify” – whatever that might mean at this point. There are 3 classes of fools – those who are in imminent danger of losing their homes, with the pick-a-pay; those who still have the loan but are managing to hold on so far; and those who have either refinanced, modified, or sold or been foreclosed on already. The first two classes will be offered modifications, plus money. The last class will get to split whatever is left.
I’m in the Class B of fools, current and paid ahead. I’ve applied for loan modifications 4 times in the past 2 years to get out of the pick a pay into a conventional loan. I’ve been turned down for modifications all four times, twice because my debt to income ratio was too high, and twice because (according to them) my debt to income ratio was too low. That’s why I’ve given up. The banks, like Wachovia, really don’t want to help because they don’t have the money to lend.
It is funny to hear how intelligent some people are as apposed to others and how clear all the paperwork was and how there was no victims and no misinformed or mislead individuals. well, with that said I’m just so glad that Wachovia has agreed to make some type of restitution and all out of the goodness of their hearts. Please! Who’s really the unintelligent one here.
Ahhh, the ole mighty dollar. What some brokers won’t do to get a little extra green in their pockets, or in the case of Wachovia a lot of green by boosting their stock price through phantom profits.
ARMs are often promoted to home buyers because they are so profitable to the companies that sell them. But according to the testimony in the suit:
“Under generally accepted accounting principles the entire interest payment due could be booked as income even when only the minimum payment was made. This accounting practice enabled lenders to use Option ARM loans as a means to generate phantom profits, thereby boosting their stock price.”
I received the claim form for the lawsuit. I had refinanced when things started to show signs of instability. Should I file?
Thank you ahead for your advice
I can think of no reason why you shouldn’t
The way I understand it is that the amount of the settlement is $50 million less $125,000 for what looks like support staff to the attorneys. That leaves$48.75 million. If everyone wo is eligible file a claim that comes to about $96,470/ claim. I also understand that this award will be taxable.
Wouldn’t that be nice to get a check for $96,470. However I believe it will be more like $964.70 if were lucky and realistically $96.47 just enough for dinner for two.
My gosh, it will probably be more like $9.64. Interesting on the letter of notification it says to call for a loan modification call 1-800-blah, blah, blah. Truly, the banks have no money to lend us. . We (the middle class) has been wiped out. But I’m going to try to stick this out and hopefully I’ll live long enough to see some equity build back up in my house. Even though I know I’ll never live to be 100. That’s probably how long it’ll take. Blah, blah, blah…
How are they coming up with the settlement for each person.
Hi Sandy,
I would guess that they would first need to know how many people opt into the settlement agreement.
By my math, the settlement offer for Class B members will be approximately $100 for all entitled — and NOT MUCH CHANCE of a modification with fixed rate interest, let alone principal reduction for those of us living in areas were hundreds/thousands walked away from their mortgages! The class action settlement info was sent to a half-million plus consumers!!! A fact I got from the consulting firm in charge of dispensing (limited) info on proposed settlement.
Essentially, those of us who made real sacrifices (drawing from retirement savings) to make timely payments when rates jumped to 7 % get NOTHING — the $100 will barely cover the expense I incurred faxing documents over and over again to Wachovia in four modification attempts, all denied because of bank’s “Wizard of Oz behind the curtain” scheme to hide the accounting formula they use for Loan to Value calculation, etc.
Class B members of this lawsuit, we need another lawsuit, one that does not leave the fox in the stagecoach in charge of settlement terms! Who’s up for a fight?
Thanks for posting, Liz. We are in the same boat, I’m in SW Florida one of the worst hit areas for foreclosures. I agree those of us in Class B should band together. If you’re interested in trying to get something together please feel free to contact me. I’m on Facebook and I also give you and anyone else who’s interested my e-mail address:xxxxxxxxxxxxx removed by request of user.
I feel for all you because I too is in the same boat. I’ve been on our State Attorney General web site finding steps in keeping my home. Contacted an attorney and he recommend that I stop paying the mortgage for now, get a market analysis on my home and setup an appointment to see him for a free consultation. Don’t know what to expect but I’m hopfully taking positive steps! This whole Wachovia/WorldSavings settlement will only feed my family a couple of days
Good Luck to you ALL…
Hello,
Let me explain how it really works. They plan to settle for 50 million and the lawyers are wanting 25 million. The lawyers will then sue the plaintiff for the 25 million. (They will not get it from the settlement nor from the people who are receiving the settlement. ) Then you have what you call the other class representatives which are people who helped. They receive 125,000 each. Meaning that in total there are 26 people. this money is taken out of the settlement. So 50 million minus 3,250,000 equals 46,750,000.
So lets get down to business. They have sent out 517,000 letters, pamphlets etc which means there are 517,000 people part of this Class action lawsuit. So when you divide the money by 517,000 than the total for each person (assuming they all decide to file the claim) each person will get 90.425 (90.43 if you round up). So that is the break down of the settlement. This is what you are looking at if you are part of this settlement.
To be honest 50 million is nothing. They should sue them for more because that is chunk change for them. The ones who really win in all of this are the lawyers (who get paid) and the bank (who gets a slap on the wrist) So what do you think of the justice system now? Did you really think they cared about the people who got taken advantage? Ask yourself, who did they really go to court for? They knew very well thats how much each person would get. Then there is the question about the 600 million in loan modification “benefits.”
Now lets break down 600 million dollar benefit. If you divide 600 million by 517,000 = $1,160.54 per person. They say there will be loan modification and interest rates will be lower but they don’t say how low or what the loan modification is going to look like. So my advice to those who are affected by this, BE SMART!! ASK A LOT OF QUESTIONS! They should have answer for you. If they don’t give you exact answers than that alone says a lot. They should be able to answer everything down to detail. So I hope that helps you guys out!!! I tried to explain the best I can about this settlement.
The Attorney
Why don’t we opt out of this settlement (wow – and miss out on $90!) and start one of our own. We can use this settlement as precedent.
I too just received the class action notice. I certainly hope the post by The Attorney is accurate because my pick a pay loan has damn near detroyed my financial situation. I used a pick n pay loan to build an investment property in the bubble dumb me… It has been setting for 2yrs on market no bites have dropped price from 375k to 200k unfortunately I could not keep up the payments as they inflated. So you got it my credit rating from A+ to D cannot even buy a car. I still have the remaining 4 pages of 20yrs of good credit. And Modification is a serious joke for 2yrs I have sent docs, made phone calls, been sick with stress still no approval. So give me my 90K and u can have the deflated property. I have no idea what else to do. They are total crooks and I also agree as a Tax Payer we should all be pd back for their greedy behavior!
Thanks for the Lawyer for the advice. I’m seriously looking into strategic default. Since I”m on Social Security and my late husband’s pension, it looks like I’m judgement proof. It’s a very hard decision when you’ve paid all your bills on time for over 30 years. It’s really hard to ‘walk away’ from responsibility when you never have done that before. But like Tammy, I’ve been seriously stressed with this mess and my health must come first.
Careful everyone what you post here about Wachovia. I’m suddenly getting lots of spam from “Wachovia” alerts asking me to update my file – which I don’t have.
Ron, could you please remove my e-mail address in my post I wrote on Feb 2-17-11?
Thanks and good look to all.
The settlement depends on the state where its located, equals <1k for class b and c members and around $2,600 for class a members. Under the modification if you get 150% ltv as your principal with a potential of 125% and interest rate of 2% (principal and interest) consider your self lucky if the loan is a 30 year fix, but even if the loan is not for 30 years. That can be a great start.
We received our notice(Class A Claim), but is too late for our $90…? The claim doesn’t address people who have been foreclosed on? The foreclosure has already happened. We were not told that our plan was a pick-a-payment plan until the paperwork was to be signed, but nothing was said about the negative amortization issue.
Trying to get info from Wachovia (or their attorneys) to get caught up, was virtually impossible. Most of the time they used excuses like “we will have to call you back in a few days with the new total” and then would not call. We had the total needed to get out of this more than once. they wanted it within three days or less of giving us the everchanging total due. There are hundreds of forclosures in our area. You would think they would want the money, not our dumpy little house.
We take responsibility for what happened to us, but I don’t want others to find themselves in the same boat.
Always make sure you meet your broker face-to-face, not through an add on the internet and/or over the phone. This was a lifetime lesson learned.
Hello Gigi,
Thanks for sharing your experience with us.
Yes, let do our own sueing! Everybody listen, This attorney open my eyes! I will Opt Out and get my own Attorney, We all should opt out, to see if they come out with something better. With us a Fraud was commited, they presented us with false documents, we contacted Wachovia as soon as we found out and they did nothing, we have been fighting since then and they have ignored us. Opt Out! a $100.00 or a $1000.00 is nothing for all the trouble we have been through. Go to pickapaysettlement.com, click on FAQs they will tell you how. Good luck to all!
My understanding is that the settlement is $50.000.000 for people who are no longer in their home, and $600.000.000 mill for those who have managed to hang on. The $50.000.000 is to be divided between California and one other state NC or Sc not sure, $32.000.000 goes to California where about 12.000 – 13.000 people are eligible to share the pot. Which makes is about $2500.00, however not everyone will get the notice, I moved twice and it was only luck that my former landlord, who also is a friend forwarded it to me. When I got it, I almost didn’t open the envelope, because at first I thought it was a solicitation for re-finance, but all in all it will not be a great amount of money, but $2500.00 or a little more will help move my life ahead.
I mailed my claim for the suit yesterday, but now I’m thinking it’s probably a scheme to get us so that we can’t file any “real” class action suit against them by signing our rights away on this. I’m in class A, still own the property (if you can call it that) but owe $105,000 more now than when I bought the property. They did offer me a modification 2 yrs ago because I missed one payment and that put me into their “hardship” category. Apparently they can’t foreclose on you if you miss only one payment, but you’ve got to be willing to let your credit score tank. I signed up to this suit thinking that maybe I could get some principal forgiveness from this, (because the money sure ain’t there except for the lawyers and their people) but this morning they told me at the number they give you that if I no longer have a pick a pay loan that it probably won’t help me. I guess I have until the 16th to think about it and opt out.
I also heard from a friend who follows all this banking stuff that in the next 3-4 months the feds are going to require the banks to readjust the amount owed on their mortgages to the current market value. I hope to God that’s true.
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