On Nov. 11, Wells Fargo, the HOPE NOW Alliance, Fannie

Mae, Freddie Mac, the Federal Housing Finance Agency and

new program introduces a consistent set of rules mortgage

servicers can voluntarily use to more easily modify loans for

at-risk customers in whatever combination needed to make

their mortgage loans affordable.

To qualify for the program, homeowners must:

• be 90 days or more past due on their loans,

• occupy their single-family homes,

• not be in bankruptcy, and

• have loan-to-value ratios greater than 90%.

For qualified homeowners, servicers may lower their mortgage

payments by exploring a combination of measures to achieve a

38% debt-to-income (DTI) ratio. Servicers will notify customers

who are likely eligible and ask them to: call, provide

proof of income, send a signed hardship letter that demonstrates

a change in their financial situation, and send a signed

affidavit confirming that their default was not knowingly caused.

Then, the following measures may be taken by the servicer (in

various combinations), stopping at the point the customer

reaches 38% DTI:

• Extend the loan term to 40 years and reduce the interest

rate (until the floor reaches 3%).

• If further reduction is required to achieve a 38% DTI,

considering mortgage debt only, a portion of the loan

principal will be set aside. No interest will be attached to

this portion; the customer will simply have to make a

balloon payment when the loan is paid off. This is permitted

if the new principal balance is not less than the

current value of the property.

• Homeowners must demonstrate an ability to make new

payments for three months before the modification is

official.

industry-leader in creating new solutions that have helped

more than 2.5 millions Americans remain in their homes.

help customers challenged with the changing economy.

Our company is committed to seeking new ways to help

broader-bases of customers so that more time can be spent

helping borrowers who require case-by-case assistance.

Wells Fargo is a strong, sound mortgage lender and servicer. Our business is uniquely positioned

to succeed in today’s challenging market. Here is our insight on current conditions, and how we

will continue to responsibly make a wide variety of loans to customers.

November 2008