In a recent government filing, Wells Fargo admitted to a very disconcerting set of facts. The SEC document says “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.” – Source
Let’s just hope the Wells Fargo nightmare of foreclosing on homes, denying mortgage modifications, issuing mortgages with bad income data, and opening fake bank accounts can finally be over.
They say they are trying to rebuild trust with consumers. And they have taken additional steps to disclose other screwups.
Wells Fargo has disclosed the following key areas they messed up on:
- Consumers were “financially harmed due to issues related to automobile collateral protection insurance (CPI) policies purchased through a third-party vendor on their behalf.”
- Refunding mortgage interest rate lock extension fees to people who only needed an extension because their mortgages were dragging on because Wells Fargo “was primarily responsible for the delays that made the extensions necessary.”
- A bunch of add-on products were not appropriately sold or serviced. “The Company is reviewing practices related to certain consumer “add-on” products, including identity theft and debt protection products that were subject to an OCC consent order entered into in June 2015, as well as home and automobile warranty products, and memberships in discount programs. The products were sold to customers through a number of distribution channels and, in some cases, were acquired by the Company in connection with the purchase of loans. Sales of certain of these products have been discontinued over the past few years primarily due to decisions made in the normal course of business, and by mid-2017, the Company had ceased selling any of them to consumers. The review of the Company’s historical practices with respect to these products is ongoing, focusing on, among other topics, sales practices, adequacy of disclosures, customer servicing, and volume and type of customer complaints.”
- Consumer accounts were incorrectly frozen.
- Poor 401(k) rollover advice.
- Incorrect fees charged to some wealth management clients.
- Bad charges for fore exchange rates when businesses were charged rates they had not contracted for.
While it is a bit comforting to see a bank take ownership of their errors, it would totally suck to have your home foreclosed on because of a bank error.