According to The Los Angeles Times, Wells Fargo has admitted to a computing error that led to nearly 400 "accidental" foreclosures. The homeowners of these properties were in the process of loss mitigation efforts, in which loan modifications and other government-backed programs would have potentially helped those who fell behind on their mortgage; however, Wells Fargo has identified a problem with their system, in which attorney’s fees were calculated when they were supposed to be absent. The calculation is believed to be the cause in these 400 foreclosures, and another two hundred and fifty loan modification denials.
The report states:
An internal review of the Company's use of a mortgage loan modification underwriting tool identified a calculation error that affected certain accounts that were in the foreclosure process between April 13, 2010, and October 20, 2015, when the error was corrected. This error in the modification tool caused an automated miscalculation of attorneys’ fees that were included for purposes of determining whether a customer qualified for a mortgage loan modification pursuant to the requirements of government-sponsored enterprises (such as Fannie Mae and Freddie Mac) and the U.S. Department of Treasury's Home Affordable Modification Program (HAMP). Customers were not actually charged the incorrect attorneys’ fees. As a result of this error, approximately 625 customers were incorrectly denied a loan modification or were not offered a modification in cases where they would have otherwise qualified. In approximately 400 of these instances, after the loan modification was denied or the customer was deemed ineligible to be offered a loan modification, a foreclosure was completed. The Company has substantially completed its internal review, subject to final validation, of mortgages where an attorney fee-related error could have occurred. In second quarter 2018, the Company accrued $8 million to remediate customers whose modification decisions may have been affected by the calculation error.
Wells Fargo faced scandals in 2016, when a regulating body found that the company had opened millions of accounts without the owner’s permission. The public called for additional scrutiny in regard to banking oversight; however, these requests turned up additional issues with the company, including incorrect fees in the wealth-management unit, inconsistent pricing in foreign exchange businesses, forcing auto-loan customers unnecessary insurance policies, and employee’s altering documents for the benefit of the company.
Although Wells Fargo said it will set aside $8 million to compensate customers, it will only work out to an average of $12,800 per borrower (however Wells Fargo has not disclosed the amount each individual borrower would get).
JT Legal Group, APC is currently monitoring the situation with Wells Fargo considering this information. Our attorneys have helped thousands of clients throughout the years from foreclosure defense, wrongful foreclosure, and mortgage litigation. If you have a question about your situation, give us a call for a free evaluation.
888-LAW-3111 Monday-Friday, 24 hrs a day, 7 days a week.
— Michael Avanesian, Esq.
[NOTE: Attorney Advertising:] Nothing posted on this blog is intended, nor should be construed, as legal advice. Blog postings and hosted comments are available for general educational purposes only and should not be used to assess a specific legal situation. Nor does any comment on a blog post create an attorney-client relationship. The presence of hyperlinks to other third-party websites does not imply that the firm endorses those websites, their contents, or the activities or views of their owners.