Wells Fargo has discovered even more homes that it accidentally foreclosed on over the last few years, now totaling over 800 homeowners that may have gone through the process of foreclosure even though they qualified for a loan modification or a repayment plan.
Poor business processes and incorrect calculations appear to be to blame for many of the bank’s foibles, and there are rising concerns that there may be additional issues that have yet to be discovered. In the mean time, homeowners affected by the foreclosures may be able to pursue compensation.
Calculation Errors in Mortgage Modifications
It’s a recurring problem with Wells Fargo’s system: homeowners who were inquiring about mortgage modifications were rejected incorrectly. This incorrect rejection, in many cases, ultimately led to their foreclosure.
A mortgage modification is intended to help those who are experiencing hardships get their mortgage back on track. This type of mortgage modification is common and is a method of ensuring that homeowners can keep their homes if they’ve experienced temporary or unexpected issues.
Wells Fargo’s system had a calculation error within its underwriting process which led to the cost of these mortgage modifications appearing much higher. Ultimately, this led to hundreds of homeowners losing their homes. While this was reported on earlier in the year, Wells Fargo has since found 145 additional customers who were foreclosed upon in this way — and there may still be more to come.
Not Just the Mortgage Modification
Some may say that those who were seeking a mortgage modification were already behind in their mortgage, and consequently the foreclosure may have been imminent regardless. However, this is an issue that occurred when homeowners might still have been able to avoid foreclosure — such as through a repayment plan.
Wells Fargo found in review that homeowners were given estimates of attorneys fees that were higher than they should have been. Though homeowners weren’t actually charged more, the larger attorney fees were calculated when determining whether homeowners could qualify for things like repayment plans. As a consequence, people attempting to avoid default may not have been able to. There’s also no way of knowing how many individuals were rejected a mortgage modification or repayment plan, and consequently had to take on predatory loans or liquidate assets to keep their homes.
In addition to this, Wells Fargo has been the center of a number of other financial scandals:
- Employees were found to be opening millions of credit card accounts and bank accounts without authorization, as a method of meeting sales goals.
- Customers were being charged for vehicle insurance that they didn’t need, and some of these customers eventually had their cars repossessed.
- Borrowers were charged incorrectly calculated fees to lock in mortgage rates, or were charged for things such as pet insurance without explanation.
- Investors that worked for Wells Fargo reported that it had a toxic sales culture.
All of this has led to a poor perception of Wells Fargo as a financial institution that doesn’t care about its customers. With high sales goals, a toxic sales culture, and rampant mistakes that have ultimately led to many customers having their lives disrupted, Wells Fargo has quite a long way to go before it is able to bring back customer faith.
Customers May Still Be Able to Receive Compensation
Wells Fargo has been reaching out to individuals who may have been impacted by these mortgage mistakes. They are currently offering an independent mediation service, and have attempted to contact those who might have been affected. Those who experienced a foreclosure with Wells Fargo may want to inquire with the company regarding whether there may have been a mistake. A total of $8 million currently exists in a fund for those who experienced these issues.
It isn’t just consumer faith that Wells Fargo has to worry about; it may eventually be regulations. Wells Fargo has already been targeted for penalties regarding its toxic sales culture, and ultimately it may be found to be in violation of many banking-related regulations.
By playing fast-and-loose with fee calculations, charging unnecessary fees, and failing to do due diligence for its clients, Wells Fargo may eventually be targeted for a shut down. The government is rapidly changing its stance of banks that are “too big to fail.”
Regards,
Ethan Warrick
Editor
Wealth Authority
