Wells Fargo Fraudulent Affidavits to Extend Liens Class Action

When a financial company has made what it calls a mistake in its loan documents, it should not be able to change those terms in its favor, unilaterally and without the knowledge of the borrowers. But the complaint for this class action alleges that that’s what Wells Fargo did with certain home equity lines of credit (HELOC) loans.

The Nationwide Class for this action is all persons who opened a standard HELOC with Wells Fargo, for which Wells Fargo recorded an Affidavit of Correction purporting to extend the maturity date of its security interest in the property. A Florida Subclass, for persons whose properties are in Florida, has also been defined.

Wells Fargo offered the HELOCs in connection with financing for the purchase of homes. The complaint alleges, “In many cases, Wells Fargo offers these loans to consumers without explaining their purpose or terms, and absent any initiation request by the borrower for such a loan.”

The loans were governed by an EquityLine with FlexAbility Agreement that offered a period of ten years during which the borrowers could draw on the loan money up to a certain limit, and then fifteen to thirty years for repayment after the draw period ended. These amounted to second mortgages and they were secured by deeds of trust which put a lien on the property for Wells Fargo in case the loans were not repaid.

If this system was to work properly, the liens had to terminate after the balances of the loans were fully repaid. If they terminated before that time, Wells Fargo would no longer have the right to take the homes if the loans were not repaid. Unfortunately for Wells Fargo, the maturity dates for some of the loans did not take the HELOC agreement into consideration. They therefore ended up with liens that terminated before the HELOC amounts had to be paid off. That meant that borrowers could owe a large amount of money without risking their home if they didn’t repay it—a significant risk for Wells Fargo.

When Wells Fargo realized its mistake, the complaint alleges, it “undertook to change the terms of its HELOC mortgages fraudulently and without notice to its borrowers.” Instead, it “surreptitiously and unilaterally recorded instruments entitled ‘Affidavit of Correction’ in the counties where its borrowers resided, purporting to ‘correct’ the maturity date” on the mortgages.

The complaint claims, “Wells Fargo executed and recorded the Affidavits of Correction without notifying borrowers, obtaining borrowers[’] approvals, or providing any consideration for the unilateral reformation of the mortgage agreements, thus clouding the titles to their properties and reducing the properties’ value and marketability without borrowers’ knowledge.”

Article Type: Lawsuit
Topic: Loans

Most Recent Case Event

Wells Fargo Fraudulent Affidavits to Extend Liens Complaint

July 28, 2020

When a financial company has made what it calls a mistake in its loan documents, it should not be able to change those terms in its favor, unilaterally and without the knowledge of the borrowers. But the complaint for this class action alleges that that’s what Wells Fargo did with certain home equity lines of credit (HELOC) loans.

Wells Fargo Fraudulent Affidavits to Extend Liens Complaint

Case Event History

Wells Fargo Fraudulent Affidavits to Extend Liens Complaint

July 28, 2020

When a financial company has made what it calls a mistake in its loan documents, it should not be able to change those terms in its favor, unilaterally and without the knowledge of the borrowers. But the complaint for this class action alleges that that’s what Wells Fargo did with certain home equity lines of credit (HELOC) loans.

Wells Fargo Fraudulent Affidavits to Extend Liens Complaint
Tags: False or Altered or Insufficient Documentation, Home Equity Line of Credit, Loan-Related Unfair Practices, Mortgage-Related Unfair Practices