Wells Fargo Illegal Fees During Loan Modification Class Action Lawsuit
Plaintiffs Henry and Renee Garcia of California have brought a class action complaint against Wells Fargo Bank alleging their Wells Fargo mortgage servicer illegally charged fees while processing foreclosures and loan modifications.
A mortgage servicer handles all of the dealings with homeowners and their mortgage concerns including requests for loan modifications and postponement of a foreclosure sale. A servicer can make more money by foreclosing on a home than by modifying a loan on that home. Late fees also provide a large portion of servicer’s income and can be collected from the proceeds of foreclosure sales.
The class action complaint states that Wells Fargo Bank violated California’s Homeowner Bill of Rights (HBOR), which bans dual tracking, violated HBOR, which tops illegal collection of late fees, and violated California’s Unfair Competition Law. HBOR became law on January 1, 2013 to address California’s foreclosure and mortgage crisis. To learn more about HBOR click here.
Class Action Lawsuit Alleges Wells Fargo Knowing Charged Illegal Fees
The lawsuit argues that Wells Fargo Bank engaged in illegal dual tracking. Dual tracking occurs when servicers process a foreclosure and a loan modification at the same time for the same person. Different departments process foreclosures and loan modifications. Foreclosures take significantly less time to process than loan modifications.
The dual-track system pushes foreclosures forward despite any delay in the loan modification process. This leads many homeowners facing foreclosure, while they are still negotiating or getting approved for a loan modification.
The class action lawsuit alleges that Wells Fargo violated HBOR by illegally charging late-fees when the homeowner’s loan modification application was still pending. These small late charges make profit for servicers. It also makes a foreclosure more likely by increasing the amount owed to the lender.
On August 17, 2005 plaintiffs Henry and Renee Garcia obtained a home mortgage for their property in Orange County, California. On April 15, 2013 the Garcias submitted a complete loan modification application to Wells Fargo. The Garcias received confirmation from a Wells Fargo Home Preservation Specialist that their application was filed. They were asked several times over the next few months to provide additional documentation. They did, and they always received a receipt confirmation.
On January 13, 2014, the Garcias phoned Wells Fargo and were told they were denied a loan modification based on their negative Net Present Value. The Garcias appealed the denial after finding Wells Fargo listed their property value at $950,000 when in fact it was valued at $700,000. Wells Fargo denied the appeal, and a trustee sale for the home was set to occur.
The class action lawsuit alleges that Wells Fargo failed to prevent dual-tracking and illegal late-fees. As a result of their fraudulent business practices, people have lost their homes and incurred serious financial damage.