During the COVID-19 pandemic, nearly 8 million mortgage borrowers took advantage of federal mortgage forbearance program as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. According to a class-action suit filed last year, Wells Fargo forced some borrowers into a forbearance program without their knowledge or consent.
The class action claimed Wells Fargo unilaterally decided to provide forbearance to customers who inquired about their mortgages or expressed hardship but had not explicitly requested and did not want their mortgage to be placed into forbearance.
Customers said Wells Fargo's decision damaged their credit, making it harder or more expensive to borrow, and impeded their ability to refinance at historically low interest rates.
They also claimed the decision violated the CARES Act, the March 2020 federal economic stimulus addressing COVID-19, which provides for forbearances at borrowers’ request.
Wells Fargo has agreed to pay $94 million to settle a class-action lawsuit brought by mortgage borrowers who said they were automatically placed in forbearance by the bank without their consent.
Approximately $35 million from the settlement will be distributed pro rata amongst the 212,000 effected loans. The remaining funds will be subjected to a claims process or used to cover legal and administrative costs.