Wells Fargo Falsely Reporting Mortgages as in Forbearance California Class Action

The complaint for this class action alleges that Wells Fargo Bank, NA improperly claimed to credit reporting agencies that certain of its mortgage accounts were in deferment or forbearance, and that no payments have been made on these accounts recently, when in reality they have been made.

Plaintiff Patrick Healy owns a home in the City of San Marcos, California for which he holds a mortgage from Wells Fargo. Healy has never requested any forbearance from Wells Fargo, and he has been making his payments faithfully.

Despite this, he discovered in June 2020 that the bank has been reporting to credit agencies that his account is in forbearance and that no payments have been made on his account for months. These representations are completely false, the complaint says. Healy claims to having made every payment regularly and on time.

Forbearance is not forgiveness, the complaint explains; it is simply moving missed payments to become due and owing at the end of the forbearance period.

This is important, the complaint says, because it is telling others that the consumer “is likely to be obligated to make a very large onetime payment in the very near future or, at a minimum, is going to have resume payment obligations since the forborne amount would be added to the regular monthly payment…”

It also appears that Wells “does not report its receipt and application of borrowers’ payments received during the forbearance period, even when the borrower remains current…” As a result, parties who obtain credit reports on such borrowers may gather that the loans are in default.

The complaint alleges Healy “was completely deprived of a home mortgage refinance loan with another lender precisely because of [Wells Fargo’s] falsely reporting the account” that way, with no recent payments made.

Why would the bank do this? The complaint claims, “Upon information and belief, [Wells Fargo] unilaterally placed millions of home mortgage loan accounts in forbearance without consumers’ knowledge or consent simply in order to avoid its own liability from a potential housing market crash that might arise” from the Covid-19 pandemic.

A class action has already been filed against Wells Fargo for this practice. The current California-only class action is therefore being brought for false reporting under the California Consumer Credit Reporting Agencies Act (CCCRA).

Two classes have been defined for this action.

  • Class A is all residents of California who, between September 18, 2013 and September 18, 2020, have had Wells Fargo falsely report their home mortgage account was in forbearance without the consumers’ knowledge or consent.
  • Class B is all residents of California who, between September 18, 2013 and September 18, 2020, have had Wells Fargo falsely report that no payments had been made on their mortgage account, when payments have been made in full and on time for the preceding three months.
Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Wells Fargo Falsely Reporting Mortgages as in Forbearance California Complaint

September 18, 2020

The complaint for this class action alleges that Wells Fargo Bank, NA improperly claimed to credit reporting agencies that certain of its mortgage accounts were in deferment or forbearance, and that no payments have been made on these accounts recently, when in reality they have been made.

Wells Fargo Falsely Reporting Mortgages as in Forbearance California Complaint

Case Event History

Wells Fargo Falsely Reporting Mortgages as in Forbearance California Complaint

September 18, 2020

The complaint for this class action alleges that Wells Fargo Bank, NA improperly claimed to credit reporting agencies that certain of its mortgage accounts were in deferment or forbearance, and that no payments have been made on these accounts recently, when in reality they have been made.

Wells Fargo Falsely Reporting Mortgages as in Forbearance California Complaint
Tags: Mortgage-Related Unfair Practices, Providing Inaccurate Information to Credit Reporting Agencies