Wells Fargo Put Homeowners into Forbearance Without Their Knowledge Class Action

During the Covid-19 pandemic, the CARES Act asked mortgage companies and servicers to offer forbearance programs for federally-backed mortgages. But the complaint for this class action alleges that Wells Fargo Bank, NA abused this provision by putting homeowners into the forbearance program when they had not requested it. The complaint alleges that this was particularly egregious for borrowers in the military.

Congress passed the CARES Act to offer relief to people who were financially stressed because of Covid-19. The forbearance program was supposed to be voluntary; homeowners had to request to be put into it. They did not have to provide any documentation, but just to attest to the fact that they were under financial hardship due to the pandemic.

According to the complaint, “Wells Fargo has unilaterally, without informed and legal consent, and without requesting or receiving any financial hardship attestation, opted unwitting borrowers into its Covid-19 mortgage forbearance program.”

How did it do this? The complaint alleges that “when borrowers logged onto Wells Fargo’s website to view their accounts, the webpage included a link at which borrowers could obtain information regarding Wells Fargo’s Covid-19 relief programs. Upon the click of a button which made no mention of forbearance, unsuspecting borrowers’ account were placed into forbearance without their informed consent or knowledge.”

At times, the complaint says, they only found out they were in forbearance when they applied for credit, including mortgage refinancing, and were refused; others found out when they were unable to make their regular payments. Wells Fargo sent notices to some customers, but the complaint claims they were “both insufficient and inaccurate.”

The complaint alleges that “after illegally placing customers’ accounts into forbearance, Wells Fargo perpetuated the problems for these customers by failing to properly apply payments that had been made to the mortgage, failing to properly report payments actually made to credit agencies, and failing to provide accurate and legally sufficient periodic statements to these customers.”

The bank’s actions were particularly indefensible with military homeowners, the complaint alleges, because “military borrowers had additional legal rights available to them to address financial difficulties. But Wells Fargo never disclosed any of those protections or rights to the military borrowers before enrolling them into the forbearance program.”

“This forbearance scam profited Wells Fargo in a number of ways,” the complaint claims, “including because the bank receives additional compensation for each loan placed in forbearance.”

Three classes have been defined for this action:

• The Nationwide Military Class is all military borrowers with a mortgage loan serviced by Wells Fargo whose mortgage was placed into Wells Fargo’s Covid-19 Mortgage Forbearance program without their informed and lawful consent.
• The Nationwide Class is all customers with a mortgage serviced by Wells Fargo whose mortgage was placed into Wells Fargo’s Covid-19 Mortgage Forbearance program without their informed and lawful consent.
• The Ohio Class is all Ohio customers with a mortgage serviced by Wells Fargo whose mortgage was placed into Wells Fargo’s Covid-19 Mortgage Forbearance program without their informed and lawful consent.

Article Type: Lawsuit
Topic: Loans
Tags: Breach of Contract, Did Not Provide Adequate Information, Forbearance, Mortgage-Related Unfair Practices