The Securities and Exchange Commission ended its review of Wells Fargo’s portfolio appraisal and accounting without implementing further action.
In September, the federal agency asked the financial services company about why the value at which it was carrying purchased credit-impaired loans was plunging, as the cash the bank anticipated to generate from such mortgages was rising.
Wells Fargo assumed PCI mortgages, loans of declining credit quality, when it acquired Wachovia Corp. around eight years ago during the financial crisis.
A month later, the firm responded and said the portfolio was affected by its loan-modification endeavors, as well as heightened economic conditions and increasing home prices. It resulted in lower projected defaults and losses on these mortgages and made it possible for more borrowers to refinance or prepay their loans.
A Wells Fargo spokesperson refused to provide additional comment.
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