8-State pact with Wells Fargo allows mortgage aid

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By Catherine Holland By Catherine Holland

PHOENIX (AP) -- Arizona Attorney General Terry Goddard has announced an eight-state agreement under which Wells Fargo & Co. will provide relief to 8,715 adjustable rate mortgage borrowers.

Goddard said the agreement provides more than $772 million of relief, including $402 million in principal forgiveness, to borrowers who obtained so-called "pick-a-payment" ARMs from Golden West Corp. and Wachovia Corp., before Wells Fargo acquired those companies.

Arizona and the other states charged that the "pick-a-payment"  loans were deceptive to borrowers. Those particularly toxic loans allowed borrowers to defer some of their interest payments and add them to the principal balance.

Goddard says the agreement includes no admission of wrongdoing by Wells Fargo but that the investigation centered on allegations that consumers were misled about the possibility that their mortgage amounts would increase.

Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington also signed onto the agreement.

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