Lawsuit: Wells Fargo Charges Illegal Extension Fees For Bank-Caused Mortgage Delays

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Wells Fargo & Company, Wells Fargo Bank, N.A., and Wells Fargo Home Mortgage are the defendants in a proposed class action lawsuit accusing them of charging mortgage borrowers illegal “rate lock extension fees.” The plaintiff says he applied for a home loan with the bank and was promised a certain interest rate if he closed on the home within a specified number of days. Due to delays in the closing process that the plaintiff says were caused by the bank, however, the “rate lock” period expired and he was forced to pay an extension fee to keep his low interest rate, according to the complaint.

The suit alleges that the defendants engage in a “systematic effort” to delay the mortgage process and place blame on the borrowers, allowing the bank to charge extensive rate lock fees. The plaintiff says he and proposed class members “were coerced to pay the fees under duress because if they did not, they risked paying higher interest rates or losing the right to purchase their homes.”

According to the lawsuit, many current and former Wells Fargo employees have confirmed the defendants’ allegedly illegal behavior, which it notes has become the subject of federal investigation. From the complaint:

“The pattern of wrongfully charging customers the rate lock extension fees has reportedly resulted in Wells Fargo hiring a law firm to conduct an internal review, the dismissal of several senior Wells Fargo mortgage executives, and a probe by the Consumer Financial Protection Bureau.”