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625 People Denied Mortgage Loan Modifications and 400 Foreclosed On Because – Wells Fargo

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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:

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.