Anyone who took out a mortgage loan from Wells Fargo and opted for the bank’s “temporary payment reduction” or “rate buydown” feature.
What’s Going On?
Attorneys have reason to believe the bank is promising borrowers a lower interest rate in exchange for money up front – but isn’t holding up its end of the bargain. As a result, it’s believed that borrowers are paying more upfront and over the course of their loan than they would have had they stuck with the original rate.
If you took out a mortgage loan from Wells Fargo and opted for the “temporary payment reduction” or “rate buydown” feature, you may have paid more than you would have had you kept the original, higher interest rate. Read on for more.
What’s Going On?
Wells Fargo offers its borrowers the opportunity to “buy down” their interest rate for the first several years of their loans. In a typical buydown or “temporary payment reduction,” a bank will accept an additional payment at closing and, in exchange, will lower the borrower’s interest rate for a set period of time. In some cases, the bank may just “throw in” this offer without the borrower putting up any money up front.
Attorneys suspect, however, that while Wells Fargo presents the buydown arrangement as a way to make the first year easier – and accepts payments to “buy down” the rate – it never actually holds up its end of the bargain. While the borrower’s payments may reflect a lower interest rate, the reduced rate is never actually applied to the amortization schedule. This means that the borrower may actually put money up front and pay more in interest over the life of their loan for a benefit – that is, a lower interest rate – that they never actually receive.
How Could a Class Action Lawsuit Help?
If a class action lawsuit is filed and is successful, borrowers may be able to get back some of the money that they paid out to Wells Fargo for their loan. It may also require Wells Fargo to change its practices in regard to its temporary buydown offering.