Borrowers sue Wells Fargo over forbearance policy

Lawsuits claim bank placed mortgages into forbearance without consent, damaging borrowers’ credit reports

TRD NATIONAL /
Aug.August 31, 2020 10:30 AM
Wells Fargo CEO Charles Scharf (Scharf by Win McNamee/Getty Images; Unsplash)

Wells Fargo CEO Charles Scharf (Scharf by Win McNamee/Getty Images; Unsplash)

Borrowers are suing Wells Fargo for placing their home loans in forbearance without explicit permission.

In a proposed class-action lawsuit filed with the U.S. District Court for the Northern District of California, borrower Pamela Delpara claimed that Wells Fargo put customers’ mortgages into forbearance regardless of whether that was actually requested, Law360 reported. Wells Fargo allegedly moved mortgages into forbearance if a customer contacted the bank and said they were experiencing distress related to Covid-19. That allegedly resulted in damage to borrowers’ credit reports.

The federal Coronavirus Aid, Relief, and Economic Security Act allows borrowers whose mortgages are backed by government-sponsored entities Freddie Mac or Fannie Mae to opt for forbearance by requesting so from their banks. But the law doesn’t allow banks to skip borrowers’ consent, Delpara said.

Another suit filed in the same district on July 31 by borrowers Brett Jacob and Samara Green makes similar claims.

Tom Goyda, a spokesman for Wells Fargo, told Law360 in an email that the bank took a “customer-focused approach” as it contended with the crisis in the spring “to ensure that every customer who needed payment relief would receive it without unnecessary delay.”

Goyda added that the bank notified affected customers as to how they could remove themselves forbearance.

“We sincerely apologize to any customer who received a forbearance and did not expressly request one, and are actively working to assist each customer who may have been negatively affected,” Goyda said. [Law360] — Akiko Matsuda


Related Articles

arrow_forward_ios
Judge Janet DiFiore and Tax Equity Now’s policy director Martha Stark Credit: NY Courts and NYU Wagner)

State’s highest court dismisses property tax reform appeal

State’s highest court dismisses property tax reform appeal
Sharif El-Gamal, Joseph Chetrit and 1384 Broadway (Getty; Google Maps)

Chetrit Group sues Sharif El-Gamal for unpaid rent

Chetrit Group sues Sharif El-Gamal for unpaid rent
Wall Street investors are prepared to buy and turn single-family homes into rentals when forbearance programs expire and homeowners look to sell. (iStock)

Wall Street investors bet on single-family rentals as mortgage payments stack up

Wall Street investors bet on single-family rentals as mortgage payments stack up
(iStock)

Landlords lost about $9B in rental payments last quarter: report

Landlords lost about $9B in rental payments last quarter: report
Fed Reserve Chairman Jerome Powell (Getty)

What low interest rates through 2023 means for real estate

What low interest rates through 2023 means for real estate
As rates hold steady at 3 percent, the average loan hit another record high: $370,200 (iStock)

Size does matter: Mortgage loan average swells to new record

Size does matter: Mortgage loan average swells to new record
State Sen. Julia Salazar, Barbara Corcoran and Gov. Andrew Cuomo (Getty)

State says Barbara Corcoran is on board with broker-fee ban

State says Barbara Corcoran is on board with broker-fee ban
Ed Adler and Wendy Silverstein (Getty)

Wendy Silverstein, Ed Adler launch loan restructuring biz

Wendy Silverstein, Ed Adler launch loan restructuring biz
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...