Wells Fargo error cost hundreds more people their homes
Wells Fargo said Tuesday that an internal error cost hundreds more people their homes than the bank initially thought.
In a new disclosure, San Francisco-based Wells said an expanded review found that approximately 870 customers were incorrectly denied or not offered loan modifications or repayment plans that would have made their mortgages more affordable. As a result, about 545 of those customers lost their homes to foreclosure, Wells said in a securities filing.
A spokesman for the bank, which has a large presence in Charlotte, said the company apologizes for the mistake.
“We are sorry that these errors occurred,” Tom Goyda said. He also said that Wells is assigning a single, dedicated point of contact to each affected customer as the bank assists them.
The new revelations come after Wells in August disclosed that a calculation error involving a mortgage underwriting tool caused 625 customers to be incorrectly denied or not offered loan modifications.
In about 400 of those cases, the homes were ultimately foreclosed on, the bank said. Affected customers were in the foreclosure process between April 2010 and October 2015, when the problem was corrected, the bank said at the time.
On Tuesday, Wells said its expanded review covered homes in the foreclosure process from March 15, 2010, to this past April 30 when new controls were implemented.
Contacted: Wells said it has contacted a substantial majority of the roughly 870 affected customers to provide remediation as well as the option of no-cost mediation with an independent mediator. Attempts to contact the remaining affected customers are ongoing, Wells said.
In August, the bank said it had set aside $8 million for customer remediation, for an average of $12,800 per customer. Goyda said Tuesday that the bank has not updated the figure.
The bank did not rule out finding other problems.
“The company’s review of these matters is ongoing, including a review of its mortgage loan modification tools,” it said in Tuesday’s filing.
It’s the latest disclosure by Wells Fargo, which remains under federal probes and regulatory restrictions more than two years after a major 2016 sales scandal. In that matter, Wells employees were accused of creating millions of unauthorized customer accounts to meet aggressive sales goals.
Since then, Wells has issued several disclosures about customer harm in other areas, including foreign exchange, wealth management and add-on products like identity theft protection.
Federal agencies, including the Justice Department, are investigating some of those activities, Wells said in an August filing with regulators.
Compensation: On Tuesday, the bank said it has set aside more money to compensate customers harmed by a practice, since discontinued, of forcing auto insurance on some consumers who didn’t need such coverage, which led in some instances to wrongful vehicle repossessions.
In August, Wells estimated it will provide about $212 million in cash remediation. On Tuesday, the bank said it has increased the remediation figure by $241 million to increase the population of potentially affected customers and provide greater payments.
Wells Fargo has pointed out steps it’s taken to overhaul its practices, including eliminating product sales goals for bankers who sell traditional products like checking accounts and credit cards.
To help repair its image, the bank launched a nationwide ad campaign this year. Those ads point out that the bank was founded in 1852 but “re-established” in 2018 – a reference to the changes it’s making to right itself.
But some lawmakers and regulators say the bank has more work to do.
During a U.S. Senate banking committee hearing in October, the head of the Office of the Comptroller of the Currency said it wasn’t satisfied with Wells as it monitors its compliance with an order it issued in April. In that action, the regulator accused Wells of improper mortgage and auto-lending practices and ordered it to provide restitution to customers.
Also last month, some Democrats on the Senate Banking Committee wrote in a letter that Wells’ CEO Tim Sloan and Chairwoman Betsy Duke should be made to testify before Congress following “rampant consumer abuses” revealed over the past year.
The request was made to committee Chairman Mike Crapo, of Idaho. A committee spokeswoman said Monday that no hearing has been scheduled.