A five year battle with Wells Fargo
Judge Elizabeth Magner in the Eastern District of Louisiana has ruled that Wells Fargo must pay a single homeowner $3.1 million in punitive damages for what the judge called the bank’s “highly reprehensible” behavior, according to The Huffington Post. This marks one of the single largest fines for mortgage abuse in American history, ending this five year legal battle.
“Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed,” Magner writes in the decision. “But perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods.”
Magner ruled in 2007 that Wells Fargo improperly charged the homeowner fees exceeding $24,000 because of a computer problem in the system used to account for his loan payments, putting him in default. Magner ruled that Wells Fargo should not have applied his payments to fees and interest, but to his principal, which threw him into an even deeper situation marred with fees and interest. The fees continued adding up, even after the homeowner declared bankruptcy.
Wells Fargo says they will likely pursue an appeal to Magner’s decision. “The ruling handed down by the court in an individual bankruptcy case covers allegations going back more than six years and ignores significant changes in servicing practices that have occurred since that time,” said a spokesman in a statement. “We believe that there are numerous factual and legal problems with the opinion and are reviewing our options regarding an appropriate legal response.”
Wells Fargo is no stranger to wrongful foreclosures
While this is among the largest of lawsuits, this is not the first mortgage abuse case Wells Fargo has grabbed headlines with. In a separate computer-glitch situation, Wells Fargo began the foreclosure process on a homeowner who had never missed a payment, and told another homeowner to skip payments, then only offered a $2 loan modification since they had missed payments (despite being advised to do so).
For abusive mortgage practices, Wells Fargo was fined $85 million by the Federal Reserve Board, and a class action lawsuit was filed for illegal HAMP denials by Wells Fargo, with states like Ohio suing the bank alongside MERS for illegal foreclosures. Last fall, it was discovered that many big banks, including Wells Fargo were still illegally using robosignature methods and foreclosing without human review (illegally).
Wells Fargo employees were allegedly incentivized to steer minorities into risky mortgages which many proclaim to be the first jenga block pulled out to cause housing to crash. The bank has not been immune to protest, however – a Texas man went on a hunger strike against the bank and a Philadelphia man found a loophole and foreclosed on his local Wells Fargo branch, becoming a folk hero.
