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Friday, June 14, 2024 | Back issues
Courthouse News Service Courthouse News Service

Wells Fargo Settles Mortgage Case for $81.6M

(CN) - Wells Fargo Bank N.A. will pay $81.6 million to settle claims it deliberately denied homeowners the ability to challenge the accuracy of their mortgage payments, the Justice Department announced Thursday.

According to the agency, Wells Fargo violated a four-year-old bankruptcy law that requires mortgage creditors to file and serve a notice 21 days before adjusting a Chapter 13 debtor's monthly mortgage payment.

In a written statement, the Justice Department said the bank acknowledged it failed to timely file more than 100,000 payment change notices and failed to timely perform more than 18,000 escrow analysis in cases involving nearly 68,000 homeowners in bankruptcy between Dec. 1, 2011 and March 31, 2015.

Under the terms of the settlement, Wells Fargo will change internal operations and submit to oversight by an independent compliance reviewer. The changes include improvements to employee training and the bank's computer platform, and the implementation of new quality control processes.

Of the funds being paid out as a result of the settlement, $53.6 million will be paid to more than 42,000 homeowners hose payments increased because of Wells Fargo's actions; $10 million will be paid by crediting homeowners' accounts at the end of their bankruptcy cases; $4.5 million will be paid by crediting the mortgage escrow accounts of about 6,000 homeowners who did not receive timely escrow payments; $4 million will be paid to 12,000 homeowner for whom the bank failed to perform timely escrow analysis; and $4 million will be refunded in case to about 6,000 homeowners.

In addition to resolving Justice Department concerns, the settlement resolves any actions that could be brought by the U.S. Trustee Program for covered conduct. However, the agency pointed out, it does not limit the rights of any homeowner or third party to take action against the bank.

Wells Fargo and the U.S. Trustee Program have selected Lucy Morris of Hudson Cook LLP to serve as an independent reviewer who will verify that the lender complies with the settlement order.

Homeowners with questions about the settlement are directed to contact Wells Fargo at 1-800-274-7025.

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