Wells Fargo hit with $250M fine, new restrictions over mortgage lending practices

Federal regulator says bank failed to comply with order requiring it to reimburse wrongly charged customers

National /
Sep.September 10, 2021 01:00 PM
Wells Fargo CEO Charlie Scharf (Getty, iStock)

Wells Fargo CEO Charlie Scharf (Getty, iStock)

Wells Fargo can’t seem to escape its troubles with regulators.

A federal oversight body hit the banking giant with a $250 million penalty this week for unsafe practices regarding its mortgage lending loss mitigation program. The Office of the Comptroller of the Currency, a Treasury Department bureau, said Thursday that the bank has failed to comply with a 2018 consent order mandating, among other things, that it identify and reimburse customers charged improper fees by its mortgage lending arm.

“Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank,” said acting Comptroller Michael Hsu. “This is unacceptable.”

The OCC said the bank failed to fully implement and maintain adequate loss mitigation practices under the terms of the 2018 order and that its lack of controls led to a failure to detect and prevent inaccurate loan modification decisions, impairing the bank’s ability to remediate customers.

On top of the fine, the OCC put restrictions on the bank’s future activities until it fixes its existing problems with its mortgage servicing business. A cease and desist order restricts Wells Fargo from acquiring some residential mortgage servicers and prevents the bank from transferring borrowers out of the bank’s loan serving until remediation is provided.

“Building an appropriate risk and control infrastructure has been and remains Wells Fargo’s top priority,” said Wells Fargo CEO Charlie Scharf in a statement. “The OCC’s actions today point to work we must continue to do to address significant, longstanding deficiencies.”

The company also reported that, as of Wednesday, a separate consent order issued in 2016 by the Consumer Financial Protection Bureau regarding the bank’s retail sales practices had expired.

Wells Fargo has been subject to a number of regulatory actions and consent orders in recent years, costing the firm billions of dollars. Most notably, the bank agreed to pay $3 billion last year to settle a fake account scandal in which Wells Fargo employees set up fraudulent accounts and credit cards in order to meet sales goals.





    Related Articles

    arrow_forward_ios
    Fritz Kaegi, Cook County assessor (Getty Images, iStock/Illustration by Steven Dilakian for The Real Deal)
    Cook County assessor Kaegi’s office collects $15M of ineligible tax exemptions
    Cook County assessor Kaegi’s office collects $15M of ineligible tax exemptions
    (iStock)
    Strong Chicago homes sales in December set stage for a robust 2022
    Strong Chicago homes sales in December set stage for a robust 2022
    (iStock)
    Chicago’s minority communities are billed far more for less water
    Chicago’s minority communities are billed far more for less water
    Compass poaches eight-agent @properties team
    Compass poaches eight-agent @properties team
    Compass poaches eight-agent @properties team
    4559 S Prairie Ave (Zillow)
    Why Bronzeville’s gentrification may become a model for other Chicago neighborhoods
    Why Bronzeville’s gentrification may become a model for other Chicago neighborhoods
    ESG Kullen's Eric Granowsky (principal an
d co-founder) and Tom DelPonti (founding principal) (ESG Kullen, The Oliver on LaSalle)
    New York investor wants to cash out on condo-to-apartment converted building
    New York investor wants to cash out on condo-to-apartment converted building
    Chicago suburbs will be another sellers’ market this year: Coldwell Banker’s Dawn McKenna
    Chicago suburbs will be another sellers’ market this year: Coldwell Banker’s Dawn McKenna
    Chicago suburbs will be another sellers’ market this year: Coldwell Banker’s Dawn McKenna
    Former NBA player Alec Peters selling condo at Chicago’s Three Sixty West (Compass, iStock, Illustration by Kevin Cifuentes for The Real Deal)
    Former NBA player Alec Peters selling condo at Chicago’s Three Sixty West
    Former NBA player Alec Peters selling condo at Chicago’s Three Sixty West
    arrow_forward_ios

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

    Loading...