Borrowers sue Wells Fargo over forbearance policy

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

National /
Aug.August 31, 2020 08:00 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


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