Even as the megabank was reeling from its fake-accounts scandal, it was putting borrowers in danger of default by drastically changing their mortgage terms without authorization, new lawsuits claim
Wells Fargo was rocked back on its heels last year when its fake-accounts scandal came to light. The revelation that the bank’s salespeople had opened unauthorized customer accounts led to congressional hearings, firings and the ouster of CEO John Stumpf. But even as that scandal was making headlines, officials in Wells Fargo’s mortgage business were making unauthorized changes to home loans, according to new lawsuits.
The changes were made to mortgages held by customers in bankruptcy, according to a New York Times report. They usually lowered customers’ monthly payments – which would seem to be beneficial. However, those changes would extend the term of the loans by decades and dramatically increase what the customers owed in the long term, the Times reported.
When a person is in bankruptcy, and change to a payment plan is subject to approval by a court and all parties involved. But according to a class-action and other lawsuits filed against the bank, Wells Fargo made huge changes to mortgage terms without that approval.
According to the Times, the changes were part of a trial loan modification program. However, they put bankrupt homeowners in danger of defaulting on commitments they had made to courts.
Wells Fargo has strongly denied the allegations, according to the Times. Bank spokesman Tom Goyda said that the borrowers and bankruptcy courts were notified of the changes.
“Modifications help customers stay in their homes when they encounter financial challenges, and we have used them to help more than 1 million families since the beginning of 2009,” Goyda told the Times.
However, court filings contend that the bank has been making unauthorized changes to borrowers’ mortgages since 2015. It’s not clear how many unsolicited loan changes Wells Fargo has made nationwide, according to the Times.
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The changes were made to mortgages held by customers in bankruptcy, according to a New York Times report. They usually lowered customers’ monthly payments – which would seem to be beneficial. However, those changes would extend the term of the loans by decades and dramatically increase what the customers owed in the long term, the Times reported.
When a person is in bankruptcy, and change to a payment plan is subject to approval by a court and all parties involved. But according to a class-action and other lawsuits filed against the bank, Wells Fargo made huge changes to mortgage terms without that approval.
According to the Times, the changes were part of a trial loan modification program. However, they put bankrupt homeowners in danger of defaulting on commitments they had made to courts.
Wells Fargo has strongly denied the allegations, according to the Times. Bank spokesman Tom Goyda said that the borrowers and bankruptcy courts were notified of the changes.
“Modifications help customers stay in their homes when they encounter financial challenges, and we have used them to help more than 1 million families since the beginning of 2009,” Goyda told the Times.
However, court filings contend that the bank has been making unauthorized changes to borrowers’ mortgages since 2015. It’s not clear how many unsolicited loan changes Wells Fargo has made nationwide, according to the Times.
Related stories:
Wells Fargo’s $142 million settlement may be too small – judge
More legal woes for Wells Fargo
