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Wells Fargo Denial of Mortgage Loan Modifications New York Class Action

How would you feel if a “faulty calculation” caused you to lose your home? The complaint for this class action alleges that that’s what happened to two couples, and many more homeowners, due to Wells Fargo’s denial to them of mortgage loan modifications.

During the financial crash of 2008, the federal government passed the Troubled Asset Relief Program (TARP) to assist certain companies which were threatened by the crash. All servicers who received TARP funding were required to participate in the Fair Housing Agency (FHA) Home Affordable Modification Program (HAMP). Wells Fargo was one of these companies. 

Among other things, HAMP required that Wells Fargo review defaulted mortgages to see if the homeowners were eligible for modification before proceeding with foreclosures.

The complaint says that Wells Fargo used its own “automated decision-making tool” to judge whether homeowners were qualified for loan modifications, rather than a free government tool. Unfortunately, the complaint says the Wells Fargo tool had “multiple systematic errors.” 

A 2010 investigation by a government agency “found numerous deficiencies” in Wells Fargo’s practices. In two 2011 consent orders, the complaint says, it agreed to correct the deficiencies, but did not. It was found not to be in compliance again in 2015.

To make a long story short, the complaint alleges that Wells Fargo refused modifications to 184 eligible homeowners between March 2013 and October 2014, for which it was fined $70 million. It also claims that a further problem in the system denied modifications to another 625 customers, and that although Wells Fargo discovered this in 2013, it decided not to disclose it. It continued to use the faulty software for another two years, until October 2015. According to the complaint additional, related errors affected another 245 customers. 

In 2018, Wells Fargo finally admitted the errors and put aside $8 million “to remediate customers,” but the complaint says that that amounts only to $12,800 per customer.

Although Wells Fargo is finally beginning to own up to its failures, the complaint alleges that it has been deliberately slow in doing so. Wells Fargo is now offering these customers apology letters and payments which they say are too low. 

This case has been brought by two couples who lost their homes to foreclosures because they were not permitted to have loan modifications. 

The class for this action is

  • All individuals who had a New York residential home mortgage loan owned or serviced by Wells Fargo on or after March 15, 2010,
  • Where the loan entered loss mitigation review or was the subject of a borrower or mortgage assistance application submitted between March 15, 2010 and April 30, 2018,
  • Where the loan qualified for a mortgage loan modification, repayment plan, or trial period under requirements for government-sponsored or non-government-sponsored entities, the FHA, or the HAMP programs,
  • But where the loss mitigation review or borrower or mortgage assistance application was rejected by Wells Fargo,
  • As a result of automatic calculation and other errors related to Wells Fargo’s mortgage loan modification underwriting tool.
Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Wells Fargo Denial of Mortgage Loan Modifications New York Complaint

November 19, 2019

How would you feel if a “faulty calculation” caused you to lose your home? The complaint for this class action alleges that that’s what happened to two couples, and many more homeowners, due to Wells Fargo’s denial to them of mortgage loan modifications.

wells_fargo_denial_of_loan_modifications_compl.pdf

Case Event History

Wells Fargo Denial of Mortgage Loan Modifications New York Complaint

November 19, 2019

How would you feel if a “faulty calculation” caused you to lose your home? The complaint for this class action alleges that that’s what happened to two couples, and many more homeowners, due to Wells Fargo’s denial to them of mortgage loan modifications.

wells_fargo_denial_of_loan_modifications_compl.pdf
Tags: Foreclosure, Mortgage or Loan Modifications, Mortgage-Related Unfair Practices, Your Bank