Well Fargo Bank

Home Mortgage Lending Policies

Wells Fargo Home Mortgage Announces 
Five Principles to Raise Standard for 
Better Service To Consumers with Credit Challenges

Wells Fargo Home Mortgage today announced five principles for improved lending policies to better meet the credit needs of traditionally underserved consumers with credit challenges. These five Wells Fargo Home Mortgage principles are designed to help these consumers gain a better understanding of their options, whether they are served by a member of Wells Fargo Home Mortgage’s sales team or by one of the company’s approved third-party mortgage brokers.

“There are millions of Americans who’ve been under-served when it comes to home mortgages because they don’t qualify for a prime loan and we want to change that,? said Pete Wissinger, president and CEO of Wells Fargo Home Mortgage. “Consumers deserve a fair price, clear disclosure of all the terms for their chosen loan, and clarity about the other options available to them that may affect their rate.?

Examples of credit challenges include less-than-perfect credit histories, inability to provide standard documentation, higher debt-to-income ratios, and higher loan-to-value ratios. Products designed for consumers with these challenges are commonly referred to as “non-prime? or “subprime? loans.

“While non-prime lending has been evolving and more options now exist for these consumers, the pace of change isn’t fast enough,? Wissinger said. “We intend to lead the home mortgage industry in serving these consumers because access to credit at an appropriate cost for risk is an essential tool to help consumers work through credit challenges and plan for the future.?

These five Wells Fargo Home Mortgage principles for non-prime lending will apply to its retail operations as well as its third-party mortgage brokers:

1. Appropriate loan pricing - Consumers will be offered products that are appropriate for their circumstances. At Wells Fargo Home Mortgage, consumers who apply directly will be offered a prime loan if they qualify for one. Also, when a consumer who may be eligible for a prime loan applies through an approved third-party broker, Wells Fargo Home Mortgage will notify both the broker and the consumer that a prime loan may be available to that consumer.

2. Extra Disclosures - Consumers will receive disclosures that exceed legal and regulatory requirements about loan options and prepayment fee agreements. Consumers who apply for loans with prepayment options will be advised of the availability of loans without prepayment options to help them understand the choices available to them, and the costs associated with these choices.

3. Caps on Points and Fees - Points and fees charged to the consumer will be capped to ensure that rates will be competitive and reflect a complete view of the consumer’s financial picture and credit history.

4. Demonstrable Benefit - A non-prime loan will be funded only if it offers a demonstrable benefit to the consumer. Such benefits might include a reduction in interest rate, a lower monthly payment, paying off delinquent debt, conversion of an adjustable rate to a fixed rate, or purchase of a home.

5. Documented Repayment Ability - A loan will be made only if the borrower has documented the ability to repay it. This feature protects consumers from agreeing to a loan program that allows too much of their monthly income to be used for debt payments. Also, it requires full documentation of income and assets for borrowers who have had very significant credit challenges. The so-called “no documentation loan? popular in the non-prime industry today can hurt the consumer by allowing borrowers to overextend themselves by claiming income that is not verified. No documentation loans also prevent Wells Fargo Home Mortgage from determining if borrowers are eligible for prime loans and thus offering them the full spectrum of prime programs or prices that would be available to them.

“These five principles will govern our policies for both our direct and indirect channels. Implementing these principles across a business with tens of thousands of employees and third-party brokers is neither easy nor simple. If we do make mistakes, we will correct them,? said Wissinger. “We’ve leveraged our years of experience as a responsible lender to arrive at these five principles and with them we intend to set a new standard of service for the home mortgage industry and for these consumers no matter how they reach us.?

Wells Fargo Home Mortgage, Inc., headquartered in Des Moines, Iowa, is a leading originator and servicer of residential mortgages. A subsidiary of Wells Fargo & Company (NYSE: WFC), Wells Fargo Home Mortgage serves all 50 states through the leading mortgage lending network in the country, with a presence in more than 1,800 mortgage and Wells Fargo bank stores and on the Internet. Combined, its retail and wholesale lending operations provided funding for approximately one of every seven homes financed in the United States in 2003.

Des-Moines , Iowa — January 26, 2004