Wells Fargo faces lawsuit from group of property heirs

Wells Fargo has allegedly been ignoring federal rules on reverse mortgages and illegally forcing homes into foreclosure instead of allowing heirs to purchase them, according to a federal group lawsuit brought by California man Robert Chandler and other wronged heirs to estates.

Estates and surviving spouses have the legal right to buy properties at 95 percent of their appraised value after the death of a borrower who took out a federally-insured reverse mortgage, attorneys for Chandler said in the complaint filed Aug. 3. Wells Fargo has not been notifying the heirs of that right, they said.

“Wells Fargo’s actions are not just wrong, they are economically irrational,” Michael Ng, Chandler’s attorney, said. “Even though elderly borrowers paid for insurance that protects the bank against the downturn in the housing market, Wells Fargo insists on evicting family members from homes that will go unsold and unoccupied.”

The suit seeks a stoppage to all wrongful foreclosures and evictions and damages of an unknown amount. [Bloomberg]