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Had a bad day? Wachovia is having a bad month!

By
Mortgage and Lending with Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 NMLS ID# 158606

On April 14 the bank announced it had lost $350 million or $0.20 per share during the first quarter of 2008. The losses, which were much higher than had been expected, were due primarily, or course, to problems in the mortgage markets.  T

hen this past Friday Wachovia got hit with a double whammy.  In the morning it was announced that Wachovia Corp. had agreed to a settlement with The Office of the Comptroller of the Currency (OCC) of as much a $144 million to end an 18 month investigation into its role in a telemarketing scheme that allegedly affected between 350,000 and 500,000 Wachovia customers, many of them elderly.

The OCC was investigating claims that the bank, over an approximate period of June 2003 to December 2006, had relationships with several telemarketers and payment processing companies that had marketed identity-theft certificates, discount travel vouchers, and other products or services, targeting a largely elderly and/or low-income clientele. The telemarketers obtained bank account information from respondents and used it to draw up a "remotely created check" which doesn't require a signature. These remotely created checks would then be deposited into the telemarketing companies' Wachovia accounts and Wachovia would withdraw the funds from the consumers' bank accounts. Consumers frequently complained that they did not authorize the withdrawals or did not receive the services/merchandise ordered.

The OCC alleged that some Wachovia officials were aware of the telemarketing practices but failed to take quick action to resolve the problem but instead profited from the relationship because of fees collected and balances maintained in the telemarketers' and payment processors' Wachovia accounts.

I'm sure that Wachovia will get it straightened out.  They have too much on the line not to.  However, in the meantime, they've greatly reduced the comp plans of their originators and are facing strong challenges in protecting their loan officers who are now being pressed by other top teir mortgage lenders.

In perspective, I think Wachovia will get it together, but boy have they had a bad month.

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Comments (7)

Rick Callaham
Team Quintana Real Estate - Spokane, WA
Spokane Realtor
Yeah companies need to know when they are living fat and not think that the profits will keep going and be expected when things can change.
Apr 29, 2008 02:47 PM
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life
Great...I do some of my banking with Wachovia.  Haven't heard this until now Larry.  It doesn't totally surprise me though, all landscapes are being combed at this point...Fraud seems to be a universal thing since the dawn of time. 
Apr 29, 2008 09:33 PM
Richard Sweum
1st Security Bank - Everett, WA

They are still advertising option arms on TV like they are a great thing for everyone!  Their acquisition of World Savings was ill-timed to say the least.  The option arm bubble won't start popping until next year, beautiful.  The 2nd wave of bad loan performance hasn't even hit yet!  Offload Wachovia if you haven't already.

Apr 30, 2008 05:25 AM
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Rick....well said.

Jason....I hate the F word don't you?  I love doing the right thing.

Rich....great stats.....THEY'RE STILL ADVERTISING THE OPTION ARMS????  WHERE'S JOHN STOSSEL AND HIS GIVE ME A BREAK.

 

Apr 30, 2008 02:30 PM
Pam Dent
Gayle Harvey Real Estate, Inc. - Charlottesville, VA
REALTOR® - Charlottesville Virginia Homes / Horse
Hi Larry.  What a mess.  It seems like its just one thing after another with the banking and mortgage industry.  Its time that they realized that they need to "play" ethically just like the rest of us or there are consequences.
May 01, 2008 03:21 PM
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production
Pam...even more they got caught with fraud yesterday.....just crazy isn't it? 
May 01, 2008 04:13 PM
Laura Moore Godek
Laura Moore Godek, PC - McHenry, IL
Is Cherry Creek selling loans to Wachovia?  I had a Cherry Creek mortgage closing today and everything went very smoothly/
May 06, 2008 12:40 PM