The Consumer Financial Protection Bureau today ordered Wells Fargo to pay more than $3.7 billion over "legal violations across several of its largest product lines," including home mortgages, according to the CFPB. Of the total, more than $2 billion is to redress more than 16 million consumer accounts while $1.7 is a civil fine.
"The bank's illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes," the CFPB said. "Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank. Wells Fargo also charged consumers unlawful surprise overdraft fees and applied other incorrect charges to checking and savings accounts."
GlobeSt.com reached out to Wells Fargo. A spokesperson replied: "As we've said before, the new leadership team has been working to address issues and, as part of that work, we identify items or areas of potential concern. To the extent issues are identified, we remediate as appropriate."
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A press release from Wells Fargo emphasized the positives it could cite: "Current leadership has made significant progress to transform Wells Fargo; in fact, the CFPB recognized that since 2020, the company has accelerated corrective actions and remediation, including to address the matters covered by today's settlement."
"We have made significant progress over the last three years and are a different company today," the release quoted CEO Charlie Scharf as saying. "We remain committed to doing the right thing for our customers and working closely with our regulators and others to deal appropriately with any issue that arises."
However, while that phrase about improvement was in the first page of the consent order — specific language included in government consent orders is often a result of negotiations — the CFPB quoted CFPB Director Rohit Chopra in its press statement: "Wells Fargo's rinse-repeat cycle of violating the law has harmed millions of American families. The CFPB is ordering Wells Fargo to refund billions of dollars to consumers across the country. This is an important initial step for accountability and long-term reform of this repeat offender."
On the real estate part of the consent decree is Wells Fargo's residential mortgage portfolio, consisting as of June 30, 2022, of $252.9 billion first lien and $14.6 billion junior lien.
"Respondent has incorrectly denied mortgage loan modification applications and miscalculated fees and other charges for thousands of mortgage borrowers, as set forth below, resulting in at least $195 million in remediation being paid to affected mortgage borrowers," the consent decree said. "Some of these failures were the result of software errors that persisted for multiple years."
There were errors in relevant calculation formulas that resulted in overstatements of attorneys' fees, an issue that came to the bank's attention in 2013. Wells Fargo tried to correct the problem but in March 2018 determined that it had yet to be fixed.
Another error from June 2013 to September 2018 occurred when the bank did not offer no-application loan modifications to about 190 households with government-sponsored entity loans because it identified the people as being dead.
Other errors resulted in unwarranted charges and fees in various situations, like when certain consumers paid off a mortgage that had faced foreclosure judgment; failing to pay property taxes from escrow in a timely fashion; miscalculating adjustable-rate mortgages after a loan modification ended; and failing to give consumers complete information about ending private mortgage insurance payments.
Wells Fargo and expensive scandal are far from strangers. Accusations of wide-spread fraud by opening new accounts without customer authorization came to light in 2016.
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