Wells Fargo Improper Mortgage Insurance Premiums Class Action

Wells Fargo is a very large mortgage lender. Some of its mortgages are insured by the Federal Housing Administration (FHA). The complaint for this class action names Wells Fargo, NA and Wells Fargo Home Mortgage as defendants and alleges that Wells Fargo continues charging borrowers for FHA premiums even after they are no longer due.

The Nationwide Class for this action is all borrowers who bought or refinanced a single-family home mortgage with Wells Fargo that was insured by the Federal Housing Administration between January 1, 2001 and the present, and who were overcharged for monthly mortgage insurance premiums.

According to the complaint, the FHA funds its program through the mortgage insurance premiums (MIP) it charges borrowers. These premiums include both up-front payments that borrowers pay even before closing and monthly premiums collected afterwards.

The FHA does not bill the borrowers for the MIP directly, however; it bills the mortgage company, which in turn adds the MIP to the borrower’s monthly mortgage bill. The borrower pays the bill, and the lender remits the portion that represents the MIP to the FHA.

The complaint claims, “The length of time for which the FHA requires monthly MIP payments varies, depending on the type of loan and the date it was issued. Once the requisite number of payments have been, the FHA will automatically stop assessing mortgage insurance against the borrower’s account…” At this point the lender must stop charging the borrower for the MIP.

The central allegation in this case is that Wells Fargo, as a “systemic issue,” continued to collect MIP payments when they were no longer due, charging borrowers “for months or even years after the FHA had already canceled the MIP payment obligation.” The complaint alleges, “Indeed, it appears that Wells Fargo’s standard practice is or was to collect monthly MIP payments, even where FHA has ceased requiring them, until the borrower contacts Wells Fargo to request removal.”

The plaintiff in this case, Thomas E. Tuggle, II is one of those who was improperly charged for MIP payments. The FHA stopped requesting the MIP on his and his wife’s mortgage as of January 2015. Only in July 2020 did Wells Fargo send the Tuggles a letter admitting it had overcharged them—for forty-one months. The complaint says the letter came with a check “purportedly intended to refund the MIP overpayments and further ‘compensate’ Mr. and Mrs. Tuggle for the loss of their funds.”

When Tuggle called to ask for more information, he was told this was a “systemic” problem that occurred with other borrowers as well.

The complaint claims that “Wells Fargo’s mishandling of MIP payments is the latest in a long line of missteps plaguing its residential mortgage portfolio.”

Article Type: Lawsuit
Topic: Loans

Most Recent Case Event

Wells Fargo Improper Mortgage Insurance Premiums Complaint

October 16, 2020

Wells Fargo is a very large mortgage lender. Some of its mortgages are insured by the Federal Housing Administration (FHA). The complaint for this class action names Wells Fargo, NA and Wells Fargo Home Mortgage as defendants and alleges that Wells Fargo continues charging borrowers for FHA premiums even after they are no longer due.

Wells Fargo Improper Mortgage Insurance Premiums Complaint

Case Event History

Wells Fargo Improper Mortgage Insurance Premiums Complaint

October 16, 2020

Wells Fargo is a very large mortgage lender. Some of its mortgages are insured by the Federal Housing Administration (FHA). The complaint for this class action names Wells Fargo, NA and Wells Fargo Home Mortgage as defendants and alleges that Wells Fargo continues charging borrowers for FHA premiums even after they are no longer due.

Wells Fargo Improper Mortgage Insurance Premiums Complaint
Tags: Extra Charges, Mortgage-Related Unfair Practices, Servicing Your Mortgage