By Chris Bruce
Wells Fargo made mortgage customers pay millions of dollars in improper fees to lock interest rates, a proposed class lawsuit filed Oct. 19 said.
The suit in the U.S. District Court for the Northern District of California targets problems that Wells Fargo acknowledged earlier this month that could require the bank to refund as much as $98 million in fees, though the bank says the actual refund amount probably will be less ( Brach v. Wells Fargo & Co. , N.D. Cal., 17-cv-05990, complaint filed 10/19/17 ).
According to the complaint by Brian Brach and other mortgage applicants, Wells Fargo employees wrongfully blamed customers for loan processing delays and made them pay fees to maintain a lock on interest rates that might otherwise expire.
Normally, according to the suit, processing only took 60 days. The bank only charged customers to extend the lock on a rate if processing took more than 60 days because of a delay that customers caused, the suit said. However, the lawsuit said the bank shifted the blame to customers, even when Wells Fargo was at fault.
“Employees in the mortgage department would thus place blame for delays on Wells Fargo customers when, in reality, it was Wells Fargo that triggered delays,” the suit said. “By blaming the customer, Wells Fargo was able to shift the responsibility for paying extension fees from itself to its customers.”
Wells Fargo acknowledged problems with its rate lock extension practices in an Oct. 4 statement, saying it didn’t consistently apply a September 2013 policy. The bank said it made changes in March 2017 that will ensure a review of all rate lock extension requests.
Wells Fargo said it expects the first refunds to go out to customers during the final quarter of 2017. Approximately $98 million in rate lock extension fees were assessed on about 110,000 borrowers between Sept. 16, 2013 and Feb. 28, 2017. Not all of the assessed fees were actually paid, and some have already been refunded, according to Wells Fargo.
Wells Fargo spokesman Tom Goyda declined to comment on the specifics of the case filed Oct. 19, saying the bank is still reviewing the complaint. “Our current processes, which were put in place in March 2017, are designed to ensure that our rate lock extension fee policy is interpreted and applied consistently,” Goyda told Bloomberg Law.
To contact the reporter on this story: Chris Bruce in Washington at email@example.com
To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com
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