As Wells Fargo continues its efforts to move on from issues which have resulted in harmed consumers and damage to the company’s brand, the bank’s past keeps catching up with it.
The latest issue to come to light is a software glitch that caused hundreds of Wells Fargo borrowers, who subsequently lost their homes, to be denied loan modifications.
Of the 625 qualified customers erroneously denied loan modifications because of the glitch, approximately 400 lost their homes, according to a 10-K filing the company submitted to the Securities and Exchange Commission (SEC). The bank has apologized for the error and said that it has set aside approximately $8 million to redress those affected.
Wells Fargo Senior Vice President of Consumer Lending Communications Tom Goyda explained to Dodd Frank Update that during an internal review the bank found that an “automated calculation error may have affected the decision on whether or not to offer or approve some mortgage modifications between April 13, 2010, and Oct. 20, 2015, when the error was corrected.”
Goyda went on to recount the steps the bank has taken to guard against a similar occurrence in the future.
“We have substantially completed our internal review, subject to final validation, of mortgages where an attorney fee-related error could have occurred. Once that process is finalized we will be reaching out to the customers who we have identified,” Goyda said. “As noted above, we eliminated the error in the modification underwriting system in October 2015. We continuously work to strengthen our processes and procedures, and address issues when they do occur. We actively monitor our portfolio and conduct internal reviews to ensure we are doing right by our customers.”
The issue came to light within a week of the bank’s $2.09 billion settlement with the Department of Justice for allegedly misrepresenting the quality of loans it originated from 2005-2007 that were included in Residential Mortgage-Backed Securities (RMBS). Many investors in RMBS containing the loans suffered significant monetary losses as a result.
Wells Fargo is only a few months removed from being the subject of the largest fine ever levied by the Consumer Financial Protection Bureau (CFPB) – $1 billion – over its auto lending practice that coerced borrowers into purchasing car insurance they didn’t need and inappropriately charging mortgage customers for missing deadlines to lock in their mortgage rates because of processing delays caused by the bank.
The month before the bureau handed down the landmark fine, four of the 16 members of Wells Fargo’s board of directors stepped down, keeping in line with an agreement the bank made with the Federal Reserve to hold its board accountable after regulators fined it $185 million for sales incentive practices that resulting in the creation of an estimated 3.5 million fake customer accounts.
News of the bank’s wrongful foreclosures caused Sen. Elizabeth Warren (D-Mass.) to take to Twitter to call for the firing of Wells Fargo CEO Tim Sloan, as well as other executives responsible in connection with the matter. She also called the amount of the money the bank set aside for redress “pathetic.” She previously called for Sloan’s firing when he testified before the Senate Banking Committee in October 2017.
Americans for Financial Reform Senior Policy Counsel Linda Jun said the new findings are “more pieces” that “just keep getting added to the piles of evidence that Wells Fargo has systematically wronged consumers,” according to The Charlotte Observer.
“It’s entirely consistent with their repeated pattern of abusive and deceitful practices,” she said. “What’s needed is both real recompense for people’s losses and suffering, and a whole different level of accountability for Wells Fargo, and for the individuals in senior management.”