Wells Fargo to pay $575M settlement over scandal involving mortgage division

The bank remains under investigation for alleged misconduct in other branches

Wells Fargo CEO Tim Sloan (Credit: Getty Images, iStock, and Pixabay)
Wells Fargo CEO Tim Sloan (Credit: Getty Images, iStock, and Pixabay)

Wells Fargo agreed to pay $575 million to all 50 states and the District of Columbia over misconduct that harmed customers, the latest in a string of payouts for the country’s third-largest bank.

The payments are meant to cover improper charges to auto loan and mortgage customers, along with the fake accounts scandal that rocked the bank two years ago, according to the Wall Street Journal.

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States have alleged that Wells Fargo improperly charged residential borrowers on mortgages. Specifically, states accused the bank of charging customers rate-lock extension fees — even when the the bank itself was what delayed customers from closing beyond the rate-lock period, according to the office of New Jersey Attorney General Gurbir S. Grewal. Wells Fargo is now refunding mortgage customers around $100 million over the accusations.

The agreement follows investigations into Wells Fargo’s sales and consumer-lending practices dating as far back as 2002. And since September 2016 the bank has paid $4 billion in settlements and fines. Earlier this year the bank paid the federal government $2.1 billion over its role in the financial crisis. In November, the bank disclosed that a software error contributed to the foreclosure of hundreds of customers’ homes.

The latest settlement is still subject to court approval in some states, but the biggest payout — about $150 million — will go to California because of the number of customers there. Meanwhile, the federal government continues to probe alleged misconduct in Wells Fargo’s wealth-management and foreign-exchange business. [WSJ] – Dennis Lynch