Another Wells Fargo Scandal?

Wed Jun 28, 2017 by on Florida Law News

Wells Fargo Scandal

Wells Fargo is at it againA scandal-plagued Wells Fargo has found itself in the midst of a new controversy involving “stealth” modifications of consumers’ mortgages while they are in bankruptcy.

According to The New York Times, a class action and other lawsuits have been filed against Wells Fargo alleging that since 2015, Wells Fargo has been making unauthorized charges to the loans of borrowers who are in bankruptcy. The changes involve shadowing a lengthier loan term (extensions as high as several decades) behind an enticing lower monthly payment. According to the lawsuits, the changes were made without the approval of the bankruptcy courts, which is a major no-no, and also without consent of the borrowers.


Wells Fargo’s (substantial) Financial Motive

Why would Wells Fargo want to do this? The extensions were hardly an act of kindness toward borrowers. By extending the terms of a mortgage by such an extensive period, (as in the case of the lead plaintiffs from North Carolina that had an extension of 26 years) Wells Fargo would be due substantially more in interest payments than under the original loan. In addition, the adjustments would enable Wells Fargo to receive as much as $1,600.00 for each loan that was adjusted, based upon a federal program setup with the intention of encouraging lenders to help struggling borrowers through modifications.

Ramifications in Bankruptcy Court

The filed lawsuits allege that Wells Fargo would implement these unauthorized changes by using documentation routinely filed with bankruptcy court to track new real estate taxes or homeowners’ insurance costs. Wells Fargo’s conduct is a problem for borrowers who may have been placed in danger of default and foreclosure because of the meddling with their payment plans as ordered by the bankruptcy court. Its conduct is also a huge problem for Wells Fargo itself, which is at risk of bankruptcy court sanctions and further federal investigation.

From the trenches,

Roy Oppenheim

Tags: Wells Fargo, Wells Fargo Scandal

4 responses to “Another Wells Fargo Scandal?”

  1. Christine Peacock says:

    Are you taking on clients with those unauthorized modifications? I had one that showed up in the partial loan history that was submitted at Final Judgement, which explained the immediate increase in the fixed rate loan when Wells Fargo announced they were taking over the account. This happened immediately while the account was timely paid. There are other issues that I am handling on appeal, but I saw your article and wondered if you have a special method of prosecuting this. Perhaps it could be handled as a separate counter claim? An aside would be that all the documents used in litigation aside from the mortgage were manufactured…

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  4. Vern says:

    I am behind on payments.. THE LOAN IS ONTEREST ONLY. HOWEVER B.O.A. has been charging me an additional $1000 every month for years. This payment appears to be principle payment on an interest only loan !

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