A federal judge has ruled that the bank’s denial of modifications were in breach of a 2010 settlement involving adjustable-payment mortgages.
U.S. District Court Judge Richard Seeborg in northern California ruled that Wells Fargo has breached a 2010 settlement involving adjustable-payment mortgages. Seeborg also found that the lender did not properly evaluate homeowners who applied for help to avoid foreclosures.
The lawyers representing the troubled homeowners argued that Wells Fargo also used the wrong methods to determine financial hardship on the part of the borrowers, according to Reuters. The San Francisco-based bank had agreed to grant loan modifications potentially worth up to $2.7 billion. The original settlement also required the bank to pay class members a total of $50 million.
Wells Fargo inherited a large portfolio of the mortgages with its 2008 acquisition of Wachovia Corp. The loans gave borrowers the option to initially pay less than the interest due, but the escalating payments that came later contributed to waves of home foreclosures in the housing crisis.
As part of the ruling, the Seeborg ordered Wells Fargo to find a way to remedy its violations and take steps to allow some homeowners to reapply for assistance. Both the bank and the plaintiffs must provide the court with proposals on correcting the breach in two weeks.
The lawyers representing the troubled homeowners argued that Wells Fargo also used the wrong methods to determine financial hardship on the part of the borrowers, according to Reuters. The San Francisco-based bank had agreed to grant loan modifications potentially worth up to $2.7 billion. The original settlement also required the bank to pay class members a total of $50 million.
Wells Fargo inherited a large portfolio of the mortgages with its 2008 acquisition of Wachovia Corp. The loans gave borrowers the option to initially pay less than the interest due, but the escalating payments that came later contributed to waves of home foreclosures in the housing crisis.
As part of the ruling, the Seeborg ordered Wells Fargo to find a way to remedy its violations and take steps to allow some homeowners to reapply for assistance. Both the bank and the plaintiffs must provide the court with proposals on correcting the breach in two weeks.
