Wells Fargo inherited a $119.7 billion portfolio of option ARMs when it purchased Wachovia. The bank now is writing down an average of $46,000 per loan, and as much as $100,000 in some cases, and transferring these loans to interest-only loans, deferring balances to six to 10 years. According to the Wall Street journal, the nation’s fourth largest bank is betting that an increase in consumer income will cover the banks option arm portfolio.
