Wells Fargo has agreed to pay $24 million to end an investigation by eight states investigating whether the company made risky mortgages to consumers without disclosing their perils. The states charged that loans known as option adjustable rate loans, referred to as “pick-a-payment” mortgages, were deceptive to borrowers. Those particularly toxic loans allowed borrowers to defer some of their interest payments and add them to the principal balance. The settlement was reached with Attorneys General in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington State. The loans were made by Wachovia and a California company it acquired, World Savings Bank. San Francisco-based Wells Fargo purchased Wachovia during the financial crisis two years ago.
Source: USA Today
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