A proposed class action claims Wells Fargo's voluntary remediation for consumers who were wrongly denied mortgage loan modifications for which they should have been qualified is insufficient to compensate the borrowers for their losses.
A proposed class action filed against Wells Fargo Bank, N.A. claims the bank’s voluntary remediation for consumers who were wrongly denied mortgage loan modifications for which they should have been qualified is insufficient to compensate the borrowers for their losses.
The lawsuit centers around federal funds that were provided to Wells Fargo as part of the Home Affordable Modification Program (HAMP), through which the bank was incentivized to modify the mortgage loans of qualified borrowers suffering financial hardship. Under the program, the case explains, homeowners could avoid foreclosure with lower monthly payments and interest rates on their mortgages.
According to the lawsuit, Wells Fargo, rather than use a Fannie Mae-developed HAMP tool, developed its own software for calculating a borrower’s loan modification eligibility. Unfortunately, the suit says, the software “caused systematic miscalculations” that resulted in at least 870 borrowers being wrongly denied loan modifications despite being qualified. Wells Fargo admitted in early November 2018 that it had, in fact, improperly foreclosed on 545 borrowers who should have instead received modifications on their mortgages.
In an attempt to “make things right,” the case says, the bank contacted “a substantial majority” of the affected consumers to offer them remediation, which constituted a check for between $1,400 and $25,000. Wells Fargo allegedly provided no explanation of how the amounts were calculated. In the letters sent with the checks, the complaint continues, the bank merely admitted that some borrowers were wrongly denied loan modifications due to a “faulty calculation” but offered no further explanation of what the issue was or how it occurred.
The plaintiff, who the lawsuit says received a check for $15,000 from the defendant after losing her New Jersey home to foreclosure, claims the amount is insufficient to compensate her for the loss of her condo and the other effects of Wells Fargo’s actions.
“The check does not make up for the severe financial and other consequences that Wells Fargo’s calculation error inflicted on [the plaintiff],” the complaint reads, “including the money and equity she lost from the foreclosure, the damage to her credit rating, and other serious consequences for her and her family.”