In a recent class action lawsuit, Wells Fargo is accused of misleading borrowers by overcharging them for certain services, such as home appraisals after a default. According to the lawsuit, the bank charged $95 to $125 for these appraisals, which borrowers were unaware of when they defaulted on their mortgages. In many cases, these fees were hidden in murky categories on the mortgage statement and ended up adding hundreds of dollars to the debt of the already indebted borrower.
Wells Fargo cheated borrowers
The class-action lawsuit alleges that Wells Fargo cheated borrowers by illegally marking up the cost of certain services for customers who defaulted on their loans. The banks unlawfully added attorney’s fees to the cost of the refinancing loan. These fees did not protect the interest of the note holder. The lawsuit demands disgorgement and restitution from Wells Fargo, as well as compensatory and treble damages.
The attorneys at Baron & Budd argue that Wells Fargo and JPMorgan Chase overcharged borrowers by overcharging them for certain services, including home appraisals. The banks charged borrowers between $95 and $125 for contested appraisals, which were normally only $50 or less. In addition, the firms hid the fees under murky categories on the mortgage statements. They cheated borrowers out of billions of dollars by charging too much.
Charged excessive fees
A new class-action lawsuit alleges that two mortgage servicers illegally charged consumers in connection with the foreclosure process. Wells Fargo and JPMorgan Chase together service 25 percent of mortgages in the United States. This combination of companies allegedly defrauded hundreds of thousands of borrowers. The fees allegedly were mislabeled as corporate advances and other “other charges” to avoid scrutiny.
The case alleges that Wells Fargo bankers pushed rate-lock extension fees on borrowers without their knowledge or consent. The company also allegedly failed to tell customers that the fees would apply to their loans and did not cover them, which caused delays and additional fees. The lawsuit claims that Wells Fargo charged millions of dollars in fees without consumers’ knowledge or consent. The company, which is the nation’s largest mortgage lender, originated $244 billion of home loans last year, or 12% of all U.S. mortgages. Wells Fargo did not comment on the lawsuit, saying it is reviewing the allegations regarding its past practices.
Charged borrowers in bankruptcy for unnecessary services
The court found that Chase’s mortgage default fee practice violates the Fair Debt Collection Practices Act, or FDCPA, by charging borrowers in bankruptcy for services they did not provide. The FDCPA requires financial institutions to provide homeowners with clear information about fees. The fees in question were allegedly incurred by the lenders if a borrower filed for bankruptcy.
The lawsuit was filed in July 2011 by Ignacio and Gabriela Perez. They had fallen behind on their mortgage of $54,000 and had to file for chapter 13 bankruptcy protection. While the couple was making regular monthly payments, the mortgage company charged them for extra services that were not necessary. The Stewarts argued that these services were a violation of bankruptcy law, but Magner found them to be unenforceable.
Paid $12 million to 1,800 borrowers
The U.S. Department of Justice and the Office of the Comptroller of the Currency approved a settlement in the Wells Fargo Chase Mortgage Default Fee Lawsuit on Tuesday that will pay $12 million to nearly 1,800 borrowers who were wrongfully denied loan modifications and charged excessive fees. The lawsuit was filed in 2019 and was filed after the bank failed to detect errors in its automated system in connection with its home affordable modification program.
Paid $1 billion to Bank of America
The Wells Fargo Chase Mortgage Default Fee Settlement was a $5 billion payment made in December 2014. The lawsuit, filed by many homeowners, focuses on violations of federal and state laws relating to the origination and servicing of mortgage loans. The settlement has several key provisions, including new standards for mortgage servicing, making foreclosure a last resort, and setting procedures for reviewing loan modification plans. Nevertheless, Attorney General Eric Holder stressed that the settlement does not preclude criminal investigations against the bank.
The Wells Fargo lawsuit was filed by over 3.5 million consumers in 2009 and 2010. In that case, the banks opened unauthorized accounts and transferred funds to them without the customer’s consent. In addition to mortgage default fees, the bank also improperly enrolled consumers in insurance programs, such as renters insurance. And as a result, the companies also submitted fraudulent applications for credit cards, auto finance, and simplified term life insurance.