Employees at Wells Fargo Receive Pay Incentives for Loan Modifications

Wells Fargo installed an incentive program that pays its single-point-of-contact employees more if they reach some sort of workout in lieu of foreclosure.

Mortgage servicers must install single points of contact for borrowers on the verge of foreclosure, based on federal regulator consent orders signed in 2011, new Home Affordable Modification Program guidelines and the servicing standards set as part of the attorneys general settlement in February.

Wells officials said they installed such a program before even the consent orders. The San Francisco-based bank now has between 3,500 and 3,800 employees that serve as the point of contact for troubled mortgage borrowers, said Randy Bockenstedt, senior vice president of default operations at Wells.

"Wells Fargo does have an incentive program. But you don't play the incentive game without doing it the right way," Bockenstedt said at the Mortgage Bankers Association servicing conference Wednesday. "Quality is king."

Bockenstedt wouldn't disclose how exactly the Wells SPOC employees are paid or when the program was put in place.

One servicer who asked not to be named shook his head at the size of the Wells SPOC headcount.

"3,500," he said. "That's huge."

"It's not cheap," Bockenstedt admitted.

The bank's servicing performance over competitors cannot be linked directly to the incentive program, but the results are there. According to its fourth-quarter financial report, roughly 7.63% of the loans on the Wells Fargo servicing portfolio were either in foreclosure or delinquency, compared to 11.5% at JPMorgan Chase and 13.5% at Bank of America.

Mark Atencio is the senior vice president of Green Tree Servicing, which is a specialty and subservicer of close to 1 million loans at an unpaid principal balance of $82 billion. Atencio said Green Tree also has an incentive program in place, and said if done correctly, money can still be made with SPOC in place especially with severity rates so high on REO sales, sometimes as much as 50%.

"It's a higher cost," Atencio said at the conference. "But you pay for it upfront and save on the backend."