According to a proposed class action lawsuit, Wells Fargo’s efforts to “help make up for” the financial losses sustained by those whose mortgage loan modifications were wrongly denied have been “wholly insufficient.” The 31-page suit out of Pennsylvania decries Wells Fargo for allocating just $8 million to hundreds of affected homeowners, many of whom, the plaintiff says, “lost their homes as a result of [the defendant’s] negligence.”
The lawsuit, which echoes the claims of a similar suit filed in December 2018, begins by explaining that under the Home Affordable Modification Program (HAMP), homeowners suffering financial hardship could be eligible to receive through their lender a mortgage modification to help stave off foreclosure by lowering monthly mortgage payments. As a HAMP servicer, Wells Fargo was required to modify any eligible mortgage for which modification would be beneficial to the homeowner, the case states.
Rather than use free software provided by the federal government to calculate HAMP modifications, Wells Fargo allegedly developed its own software with which it miscalculated the attorneys’ fees associated with a foreclosure. The suit argues that as a result of the faulty calculations, the software caused hundreds of homeowners to be denied mortgage modifications to which they were entitled.
The lawsuit claims Wells Fargo knew as early as 2011 that it had failed to properly audit its loan modification software. After the Office of the Comptroller of the Currency (OCC) found that the bank had not adequately overseen foreclosure proceedings, Wells Fargo agreed to a consent decree that ensured its compliance with HAMP, the case says. Despite both the decree and Wells Fargo’s awareness of its auditing insufficiencies, the bank, the suit alleges, did not discover the actual software error itself until August 2013, and even then attempted to conceal the blunder to avoid further scrutiny from the OCC.
The OCC in 2015 imposed stricter requirements on Wells Fargo after discovering that the bank was still out of compliance with the consent decree, and in 2016 fined the defendant $70 million for its prior failure to properly audit HAMP compliance, the lawsuit continues. Nevertheless, the defendant, the case says, waited until August 2018 to notify the public of the software error “as well as other errors” that, according to the complaint, caused 625 homeowners to be denied loan modifications.
With regard to the plaintiff, the lawsuit claims the woman received a letter from Wells Fargo in July 2019 in which she was informed that a “faulty calculation” had caused her to be wrongly denied a loan modification. Although the letter included a check for $24,700 to “help make up for [the plaintiff’s] financial loss,” the woman claims the amount was “wholly insufficient” to compensate her for the improper foreclosure and loss of her home. According to the complaint, the plaintiff owned one of roughly 500 homes foreclosed upon due to Wells Fargo’s erroneous HAMP modification denials.
The lawsuit seeks to certify the following nationwide class, as well as a proposed Pennsylvania subclass:
“All persons who (i) have or had a loan secured by real property in the United States, with Defendant as the mortgagee; (ii) applied for, were considered for, were qualified for, or were entitled to a loan modification pursuant to the requirements of government-sponsored enterprises (such as Fannie Mae and Freddie Mac), the U.S. Department of Treasury’s Home Affordable Modification Program, or any government program; and (iii) were denied or not offered a loan modification by Defendant.”