Wells Fargo Computer Glitch Blamed as Hundreds Lose Their Homes

CBS News | December 4, 2018 Wells Fargo says a computer glitch is partly to blame for an error affecting an estimated 545 customers who lost their homes. The giant bank filed papers with the Securities and Exchange Commission last month, revealing it incorrectly denied 870 loan modification requests. About 60 percent of those homeowners went into foreclosure. Read more here.

Wells Fargo Plans to Refund Some Mortgage Customers

April 13, 2018 | USA Today        Wells Fargo outlined plans Wednesday to refund customers who were charged extra fees to extend rate locks on mortgages because of delays that were caused by the bank, not the customers.

The San Francisco-based bank, which is still working to repair its reputation following last year's fake account scandal, said it will refund customers who paid fees to extend interest rate locks between Sept. 16, 2013, through Feb. 28, 2017 but "who believe they shouldn't have paid those fees."

In a rate lock, the lender guarantees that it will provide the borrower with a mortgage at a specific rate, say 4%, for a specific time period, such as 60 days. There is often a charge to extend the rate-lock period.

In the Wells Fargo case, borrowers were hit with additional fees for allegedly getting their loan paperwork in late. But the bank, after a review of its rate-lock fee policies, acknowledged that the delays in some cases were caused on its end.

In a statement, the bank said its rate-lock extension policy put in place in September 2013 was "at times, not consistently applied, resulting in some borrowers being charged fees in cases where the company was primarily responsible for the delays that made the extensions necessary."

Effective March 1, 2017, Wells Fargo changed how the company manages the mortgage rate-lock extension process.

The company said it would reach out to customers and start issuing refunds in the final months of this year.

While roughly $98 million in rate-lock fees were assessed to about 110,000 loan applicants in the nearly two-and-a-half-year period in question, the company believes a "substantial number" of those fees were "appropriately charged."

As a result, Wells Fargo said "the amount ultimately refunded likely will be lower, as not all of the fees assessed were actually paid and some fees already have been refunded."

The move was the latest attempt by the bank to rebuild trust with customers, its CEO Tim Sloan said in a statement.

"We want to serve our customers as they would expect to be served, and are initiating these refunds as part of our ongoing efforts to rebuild trust," Sloan said.

Wells Fargo Says 3.5 million Accounts Involved in Scandal

AP via Houston Chronicle | August 31, 2017           The scope of Wells Fargo's fake accounts scandal grew significantly on Thursday, with the bank now saying that 3.5 million accounts were potentially opened without customers' permission between 2009 and 2016.

That's up from 2.1 million accounts that the bank had cited in September 2016, when it acknowledged that employees under pressure to meet aggressive sales targets had opened accounts that customers might not have even been aware existed. People may have had different kinds of accounts in their names, so the number of customers affected may differ from the account total.

Wells Fargo said Thursday that about half a million of the newly discovered accounts were missed during the original review, which covered the years 2011 to 2015.  Read more here.

Wells Fargo Hit With Class-Action Lawsuit Over Auto Insurance Charges

Los Angeles Times | July 31, 2017          Wells Fargo & Co., which is still settling class-action lawsuits over its fake-accounts scandal, has now been hit with yet another — related to the bank’s revelation last week that it charged auto loan customers for unnecessary insurance.

An Indiana man who says he was charged $598 for auto coverage despite repeatedly asking Wells Fargo to rescind the charges is the lead plaintiff in the case, which accuses the San Francisco bank of scheming with National General Insurance Co. to “bilk millions of dollars from unsuspecting customers.”

The lawsuit, filed Sunday in U.S. District Court in San Francisco, does not name the insurance carrier as a defendant. It is seeking class-action status.

Last week, the bank acknowledged that an internal probe spurred by customer complaints found that, between 2012 and 2017, about 570,000 borrowers may have been wrongly pushed into auto-insurance policies despite having their own coverage.  Read more here.

How to Protect Yourself From Unauthorized Mortgage Modifications

It’s important to review any mortgage statements or documents you receive. Changes outside of what you originally agreed to should be considered red flags.

 

The Seattle Times | July 9, 2017        The company that holds your mortgage isn’t supposed to extend your loan or alter your monthly payments if you don’t agree to it beforehand. But recent lawsuits argue Wells Fargo changed the terms of home loans held by customers in bankruptcy without their consent.

Wells Fargo allegedly attached loan-modification letters to payment-change notices, forms routinely filed in Chapter 13 bankruptcy cases to authorize preapproved adjustments. Without following the proper procedures, the bank allegedly lowered monthly payments and extended loan terms by years, potentially costing borrowers thousands of dollars in interest.

It’s unclear how many of the unauthorized loan changes Wells Fargo is alleged to have made (the company has denied wrongdoing), but if you’ve filed for bankruptcy, pay attention to what’s happening to your mortgage, especially if you live in a jurisdiction that allows a trustee to make payments on your behalf.

“Even though the consumer might be in a bankruptcy, they should not ignore any written notices that they get from their mortgage servicer,” says John Rao, a bankruptcy expert and attorney with the National Consumer Law Center. “If there’s anything in it that suggests that there’s a payment change or something, you know, they probably want to contact their attorney and just make sure that this is correct.”  Read more here.

New Wells Fargo Scandal Over Modifying Mortgages Without Authorization

CNN | June 15, 2017          Christopher and Allison Cotton had 16 years remaining on their mortgage when family medical expenses forced them into bankruptcy in 2014.

Wells Fargo went ahead and modified the North Carolina couple's mortgage several times without their authorization, according to a class action lawsuit. The bank extended the term of the mortgage by nearly 26 years, documents say.

If the "stealth" modifications hadn't been caught, the Cotton family's total interest payments would have nearly tripled to more than $140,000, the lawsuit said.

"I anticipate Wells Fargo has done this to thousands of customers," said Theodore Bartholow III, a lawyer who represents the Cottons and last week launched the class action.

News of the latest legal trouble facing Wells Fargo (WFC) was first reported by The New York Times. It comes as Wells Fargo continues to dig out of a scandal over unauthorized account openings and alleged worker retaliation.

Bartholow described an "insidious" process where Wells Fargo uses a routine, but little-noticed form to "sneak through" mortgage modifications on unsuspecting homeowners.  Read more here.

Supreme Court Says Cities Can Sue Banks Over Predatory Loans

USA Today | May 1, 2017       The Supreme Court ruled Monday that cities can sue banks for discriminatory mortgage lending practices, but they must prove that predatory loans led to damages such as lost tax revenue and higher spending on municipal services.

The decision was a partial victory both for Miami, which sought standing to sue banks under the Fair Housing Act, and for Bank of America and Wells Fargo, which argued that the city's damages were too many steps removed from the original loans. The dispute now returns to lower courts for further action.

The 5-3 ruling was written by Justice Stephen Breyer and backed by the court's liberal justices and Chief Justice John Roberts. Three justices — Clarence Thomas, Anthony Kennedy and Samuel Alito — argued that the city had no right to sue under the landmark 1968 civil rights law in the first place. Newly confirmed Justice Neil Gorsuch did not take part in the decision.  Read more here.

Morning Agenda: The Wells Fargo Clawback

The New York Times | April 11, 2017         How could this have happened? You might have wondered after the scandal over fraudulent accounts at Wells Fargo.

Most of the blame has been pinned on two people: John G. Stumpf, the former chief executive, and Carrie L. Tolstedt, the former head of community banking.

To meet sales goals set by Ms. Tolstedt, bankers across Wells Fargo committed fraud, opened unwanted or unneeded accounts, and occasionally moved money in and out of the sham accounts.

The board of the bank will claw back $75 million from the two former executives, the largest forced return of pay and stock grants in banking history.  Read more here.

Wells Fargo to Pay $50 Million to Settle Home Appraisal Overcharges

The New York Times | November 1, 2016       In the latest hit to the battered bank, Wells Fargo has agreed to pay $50 million to settle a class-action lawsuit that accused the bank of overcharging hundreds of thousands of homeowners for appraisals ordered after the homeowners defaulted on their mortgage loans.

The proposed settlement calls for Wells Fargo to automatically mail checks to more than 250,000 customers nationwide whose home loans were serviced by the bank between 2005 and 2010.

The checks will typically be for $120, according to Roland Tellis, a lawyer with Baron & Budd, the law firm that represented Wells Fargo’s customers. If a judge signs off on the settlement, as expected, the checks will be distributed next year.

When a borrower falls behind on a loan, mortgage contracts typically let the lender order an appraisal of the home’s current value. The cost of that appraisal, known as a “broker price opinion,” can be passed on to the borrower, but Wells Fargo used one of its own subsidiaries to conduct appraisals and then routinely marked up the cost, according to the lawsuit.

Borrowers would be charged $95 to $120 for a service that cost the bank $50 or less, the complaint said. The charges were then listed cryptically on mortgage statements, with vague descriptions like “other charges” or “other fees.”

“People who are behind on their loans are the people who can least afford to be charged marked-up fees, but unfortunately, that’s exactly what happened,” Mr. Tellis said.

Several homeowners filed suit against Wells Fargo in 2012 in a Northern California federal court. Last year, a judge granted class-action status to a portion of the claims related to racketeering charges.  Read more here.

Voices From Wells Fargo: ‘I Thought I Was Having a Heart Attack’

The New York Times | October 20, 2016     The scandal at Wells Fargo over the creation of unauthorized accounts shook its customers’ faith in the bank, but it took an even sharper toll on the company’s workers. A number of them say they faced a stark choice: Create new accounts by any means possible, or risk being fired for falling short of their sales goals.

Several former Wells Fargo employees gave The New York Times firsthand accounts, by email or by phone interview, of how that pressure affected them, and of the ethical shortcuts they say they saw colleagues take. The following are excerpts. Some people asked to be identified only by their first name and last initial, to protect their future employment prospects.

Wells Fargo responded by saying it did not have “specific comments on the team members involved” but wanted to reiterate that the bank had “made fundamental changes to help ensure team members are not being pressured to sell products, customers are receiving the right solutions for their financial needs, our customer-focused culture is upheld at all times and that customer satisfaction is high.”   Read more here.