Wells Fargo Under Fire Over Accusations of Improper Mortgage Changes

On the heels of a major consumer bank scandal last year, Wells Fargo (NYSE: WFC) is under fire again over accusations of improper mortgage charges. A new class action lawsuit alleges that officials in the mortgage arm of the bank put through unauthorized charges to borrowers in bankruptcy.

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VALENCIA, CA/USA – AUGUST 17, 2014. Wells Fargo bank exterior. Wells Fargo & Company is an American multinational banking and financial services holding company headquartered in San Francisco, California.

According to a report from The New York Times, the changes typically lowered monthly payments for customers, which appeared to benefit the borrower. But the changes extended the terms of the loan by decades, so consumers would pay the bank more money over the lifetime of the loan.

Court documents say the bank has been making these unauthorized changes to mortgages since 2015.

When going through bankruptcy, changes to payment plans must be approved by the court and other involved parties. Wells Fargo, according to the lawsuit, pushed through major changes to mortgages without seeking approval.

Wells Fargo in Trial Loan Modification Process

 

The changes were part of the bank’s trial loan modification process.

A spokesman for Wells Fargo, Tom Goya, denied the claims in recent lawsuits. Goya told the New York Times: “Modifications help customers stay in their homes when they encounter financial challenges, and we have used them to help more than one million families since the beginning of 2009.”

Seven cases describing the conduct have emerged in New Jersey, Louisiana, Pennsylvania, North Carolina and Texas.

In a North Carolina court, the bank presented records that showed it made changes on at least 25 loans since 2015.

This isn’t the first time Wells Fargo has been accused of making payment changes on mortgages filed with bankruptcy courts. The company settled with the Justice Department in 2015, agreeing to pay $81.6 million to borrowers in bankruptcy. The bank failed to notify borrowers on time when their monthly payments changed to reflect different insurance or real estate tax costs.