("Wells Fargo CEO: Bank's Loan Modifications Help Home Prices," published at 12:31 p.m. EST, incorrectly described the rates of foreclosures in pools of mortgages serviced by Wells Fargo and other large mortgage servicers in the third paragraph. The correct version follows.) By Marshall Eckblad Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Wells Fargo & Co. (WFC) Chief Executive John Stumpf said Friday his bank's handling of at-risk, underwater mortgages helps support the nation's housing prices and also offers borrowers better options than other large lenders. Stumpf told investors at a conference in Boston that Wells Fargo's effort to lower borrowers' monthly payments helps borrowers stay in their homes. Helping borrowers avoid foreclosure or short sales can help stabilize sliding housing prices by keeping inventories of for-sale homes at lower levels. Stumpf said the mortgages Wells Fargo services, as of June 30, had a lower combined rate of foreclosures and delinquencies than other large mortgage services. Of mortgages Wells Fargo services, as of June 30, 7.49% of them were either delinquent or in foreclosure, according to Inside Mortgage Finance; among other large mortgage servicers, the average combined rate of delinquencies and foreclosures was 11.18%. An article published by Dow Jones Newswires earlier this week said Wells Fargo is reducing troubled borrowers' mortgage payments in many instances by deferring principal payments for as long as a decade, and that Wells Fargo is likely for years to hold billions in underwater mortgage debt tied to the nation's most depressed housing markets. Stumpf told investors, in response to a question, that such criticism "misses the point." The modification program aims to lower borrowers' monthly costs, he said, rather than immediately address a borrowers' negative home equity--or when borrowers owe more in mortgage debt than their underlying homes are currently worth. "This is about working with customers one-on-one...and helping them," Stumpf said. Borrowers with modified Wells Fargo loans are going back into default at half the rate of borrowers with modified loans from other lenders, he added. "The proof is really in the pudding," Stumpf said. "I challenge anyone to find a better mortgage company in this respect." The loans in question are $107 billion in debt tied to option adjustable-rate mortgages, a relic of the U.S. housing boom that allowed borrowers to make small monthly payments in return for increasing their mortgage balance. Wells Fargo inherited the loans from Wachovia Corp. last year and in essence purchased them at a steep discount, which means the loans can generate billions in losses before additional losses affect Wells Fargo's earnings. Stumpf said bout 60% of the loans are tied to properties in California, where Wells Fargo says it's seen strong indications that prices of lower-end homes are stabilizing. JPMorgan Chase & Co. (JPM) made similar comments Thursday about California real estate. -By Marshall Eckblad, Dow Jones Newswires; 212-416-2156; marshall.eckblad@dowjones.com
