Wells Fargo mistake could have led to 400 foreclosures


U.S. News Aug. 4, 2018 / 4:02 PM

By Susan McFarland

A report filed to the SEC Friday by Wells Fargo revealed the bank made an error that could be the reason for hundreds of foreclosures. Photo by Ken Wolter/Shutterstock.com

Aug. 4 (UPI) -- Wells Fargo says a company miscalculation could be the reason for hundreds of foreclosures, the bank revealed in a regulatory filing Friday.

The report , filed to the Securities and Exchange Commission, said 625 customers were "incorrectly" denied a loan modification or were not offered a modification, all of which should have qualified.

Out of those cases, 400 homes were foreclosed, something Wells Fargo defends might have happened anyway.

To make up for the mistake, Wells Fargo has accrued $8 million to remedy affected customers, the report said.

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That amount averages $12,800 per borrower but the company did not say how much each individual would get or how the compensation would be distributed.

Wells Fargo spokesman Tom Goyda told the Los Angeles Times all are receiving what the company deems is appropriate given the circumstances.

"We're very sorry that this error occurred," Goyda said, adding there is not a 100 percent "clear cause and effect relationship between the modification denial and the ultimate foreclosure."

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Goyda said he could not say what prompted the review of the loan modifications.

The latest finding adds to the bank's growing list of problems, including a scandal in 2016 after regulators found the bank had opened millions of accounts without customers' permission to meet quotas and generate sales bonuses.

On Wednesday, the bank agreed to pay a $2.09 billion penalty for issuing mortgage loans it was aware contained incorrect income information. The bank agreed to pay the civil penalty under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for the actions, which the government said contributed to last decade's financial crisis.

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In June, Wells Fargo agreed to pay $5.1 million to settle charges of financial misconduct, after the SEC learned the bank generated large fees by improperly encouraging retail customers to actively trade market-linked investments, which were intended to be held to maturity.

In addition, the SEC found that Wells Fargo did not properly investigate employees who were engaged in the practice and supervisors systematically approved the transactions, despite internal policies prohibiting similar practices.

In February, the Federal Reserve capped Wells Fargo assets until the bank reforms itself to the regulator's satisfaction.

* Topics * Federal Reserve * Wells Fargo



Wells Fargo to pay $2B penalty to resolve mortgage abuse claims


U.S. News Aug. 1, 2018 / 7:34 PM

Wells Fargo to pay $2B penalty to resolve mortgage abuse claims

By Daniel Uria

Wells Fargo agreed to pay a $2.1 billion penalty to settle claims it issued mortgage loans it was aware contained incorrect income data, the Department of Justice said Wednesday. File Photo by David Yee/UPI | License Photo

Aug. 1 (UPI) -- Wells Fargo agreed to pay a $2.09 billion penalty for issuing mortgage loans it was aware contained incorrect income information, the Department of Justice said Wednesday.

The bank agreed to pay the civil penalty under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for the actions, which the government said contributed to last decade's financial crisis.

"Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans," acting U.S. attorney for the Northern District of California, Alex G. Tse, said. "Today's agreement holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted. Our office is steadfast in pursuing those who engage in wrongful conduct that hurts the public."

Under the deal Wells Fargo agreed to pay the penalty without admitting liability to resolve all civil claims under FIRREA. The government agreed to release Wells Fargo from any potential claims arising under the Program Fraud Civil Remedies Act, the Injunctions against Fraud Act and on certain other grounds, the company said in a statement .

RELATED SEC: Wells Fargo will pay $5.1M to settle misconduct claims

"We are pleased to put behind us these legacy issues regarding claims related to residential mortgage-backed securities activities that occurred more than a decade ago," Wells Fargo CEO Tim Sloan said. "Wells Fargo remains focused on our important role as one of the nation's leading providers of mortgage financing and on our commitment to expanding sustainable homeownership opportunities for our customers."

The company added that "there were no claims that individual customers were harmed as a result of the alleged conduct."

The Justice Department alleged that Wells Fargo sold at least 73,539 stated income loans between 2005 and 2007, despite knowing a substantial portion contained misstated income. Nearly half of those defaulted, resulting in billions of dollars of losses to investors.

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* Topics * Wells Fargo