Wells Fargo & Co. said Monday that it has begun "aggressively" contacting borrowers it inherited with its Dec. 31 acquisition of Wachovia Corp. to help them modify their mortgages and to prevent a crush of foreclosures.

Wells, of San Francisco, bought Wachovia after the Charlotte company became hobbled by high-risk home loans. It said it began the outreach initiative this month.

In total, 478,000 Wachovia customers, primarily those whose loans are delinquent or are likely to become delinquent, will be eligible for assistance, Wells said Monday. Customers with loans being referred to foreclosure or that are in foreclosure will receive an extension until Feb. 28 to allow them time to restructure their loans with Wells.

"For those at-risk, we will offer combinations of term extensions of up to 40 years, interest rate reductions, charge no interest on a portion of the principal for some period of time and, in geographies with substantial property value declines, we will even use permanent principal reductions," Mike Heid, co-president of Wells Fargo Home Mortgage in Des Moines, said in a press release.

Mr. Heid said the goal of any modification is to achieve sustainable and affordable mortgage payments, generally targeting a 38% mortgage payment-to-income ratio. Wells increased its full-time default and home-retention staff 125%, to almost 6,000, in the last two years. It said it will continue to expand these teams as demand warrants.

Mr. Heid said 93% of Wells mortgage customers are current on their mortgage payments, and the company does not want that percentage to drop as a result of the acquisition of Wachovia's $120 billion mortgage portfolio.

Wells said its experience to date shows that it should be able to help the majority of troubled Wachovia customers.

Wells has reached 94% of its customers who have become at least two payments past due since the onset of the financial crisis last year. Of the customers who received a loan modification, one year after the loan was modified about 70% were either current on their loans or less than 90 days past due.

Wells is to report its fourth-quarter results Wednesday. Analysts polled by Thomson Reuters, on average, expect it to report a profit of 33 cents a share.

Analysts will look for assurances that the Wachovia acquisition is not eating more than expected into Wells' capital. Citigroup Inc. analyst Keith Horowitz wrote in a note last week that "there is little cushion" and there is "a risk of a dividend cut in 2009 if conditions continue to deteriorate."

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