Wells Fargo sorry again for mort­gage mis­take

The Herald (Rock Hill) - - Business - BY DEON ROBERTS der­oberts@char­lot­teob­server.com

Wells Fargo said Tues­day that an in­ter­nal er­ror that af­fected cus­tomers re­quest­ing mort­gage mod­i­fi­ca­tions to re­main in their homes im­pacted hun­dreds more peo­ple than the bank ini­tially thought.

In a new dis­clo­sure, San Fran­cisco-based Wells said an ex­panded re­view found that ap­prox­i­mately 870 cus­tomers who were go­ing through fore­clo­sure were in­cor­rectly de­nied or not of­fered loan mod­i­fi­ca­tions or re­pay­ment plans that would have made their mort­gages more af­ford­able. As a re­sult, about 545 of those cus­tomers lost their homes, Wells said in a se­cu­ri­ties fil­ing.

A spokesman for the bank, which has a large pres­ence in Char­lotte, said the com­pany apol­o­gizes for the mis­take. “We are sorry that th­ese er­rors oc­curred,” Tom Goyda said. He also said that Wells is as­sign­ing a sin­gle, ded­i­cated point of con­tact to each af­fected cus­tomer as the bank as­sists them.

The new rev­e­la­tions come af­terWells in Au­gust dis­closed that a cal­cu­la­tion er­ror in­volv­ing a mort­gage un­der­writ­ing tool caused ap­prox­i­mately 625 cus­tomers to be in­cor­rectly de­nied or not of­fered loan mod­i­fi­ca­tions.

In about 400 of those cases, the homes were ul­ti­mately fore­closed on, the bank said. Af­fected cus­tomers were in the fore­clo­sure process be­tween April 2010 and Oc­to­ber 2015, when the prob­lem was cor­rected, the bank said at the time.

On Tues­day, Wells said its ex­panded re­viewed cov­ered homes in the fore­clo­sure process from March 15, 2010, to this past April 30 when new con­trols were im­ple­mented.

Wells said it has con­tacted a sub­stan­tial ma­jor­ity of the roughly 870 af­fected cus­tomers to pro­vide re­me­di­a­tion as well as the op­tion of no­cost me­di­a­tion with an in­de­pen­dent me­di­a­tor. At­tempts to con­tact the re­main­ing af­fected cus­tomers are on­go­ing, Wells said.

In Au­gust, the bank said it had set aside $8 mil­lion for cus­tomer re­me­di­a­tion, for an av­er­age of $12,800 per cus­tomer. Goyda said Tues­day that the bank has not up­dated the fig­ure.

The bank did not rule out find­ing other prob­lems.

“The com­pany’s re­view of th­ese mat­ters is on­go­ing, in­clud­ing a re­view of its mort­gage loan mod­i­fi­ca­tion tools,” it said in Tues­day’s fil­ing.

It’s the lat­est dis­clo­sure by Wells Fargo, which re­mains un­der fed­eral probes and reg­u­la­tory re­stric­tions more than two years af­ter a ma­jor 2016 sales scan­dal. In that mat­ter, Wells em­ploy­ees were ac­cused of cre­at­ing mil­lions of unau­tho­rized cus­tomer ac­counts to meet ag­gres­sive sales goals.

Since then, Wells has is­sued sev­eral dis­clo­sures about cus­tomer harm in other ar­eas, in­clud­ing for­eign ex­change, wealth man­age­ment and add-on prod­ucts like iden­tity theft pro­tec­tion.

Fed­eral agen­cies, in­clud­ing the Jus­tice Depart­ment, are in­ves­ti­gat­ing some of those ac­tiv­i­ties, Wells said in an Au­gust fil­ing with reg­u­la­tors.

On Tues­day, the bank said it has set aside more money to com­pen­sate cus­tomers harmed by a prac­tice, since dis­con­tin­ued, of forc­ing auto in­sur­ance on some con­sumers who didn’t need such cov­er­age, which led in some in­stances to wrong­ful ve­hi­cle re­pos­ses­sions.

In Au­gust, Wells esti- mated it will pro­vide about $212 mil­lion in cash re­me­di­a­tion. On Tues­day, the bank said it has set aside an ad­di­tional $241 mil­lion to in­crease the pop­u­la­tion of po­ten­tially af­fected cus­tomers and pro­vide greater pay­ments.

Wells Fargo has pointed out steps it’s taken to over­haul its prac­tices, in­clud­ing elim­i­nat­ing prod­uct sales goals for bankers who sell tra­di­tional prod­ucts like check­ing ac­counts and credit cards.

To help re­pair its image, the bank launched a na­tion­wide ad cam­paign this year. Those ads point out that the bank was founded in 1852 but “reestab­lished” in 2018 — a ref­er­ence to the changes it’s mak­ing to right it­self.

But some law­mak­ers and reg­u­la­tors say the bank has more work to do.

Dur­ing a U.S. Se­nate bank­ing com­mit­tee hear­ing in Oc­to­ber, the head of the Of­fice of the Comptroller of the Cur­rency said it wasn’t sat­is­fied with Wells as it mon­i­tors its com­pli­ance with an order it is­sued in April. In that ac­tion, the reg­u­la­tor ac­cused Wells of im­proper mort­gage and auto-lend­ing prac­tices and or­dered it to pro­vide resti­tu­tion to cus­tomers.

Also last month, some Democrats on the Se­nate Bank­ing Com­mit­tee wrote in a let­ter that Wells’ CEO Tim Sloan and Chair­woman Betsy Duke should be made to tes­tify be­fore Congress fol­low­ing “ram­pant con­sumer abuses” re­vealed over the past year.

The re­quest was made to com­mit­tee Chair­man Mike Crapo, of Idaho. A com­mit­tee spokes­woman said Mon­day that no hear­ing has been sched­uled.

WELLS FARGO SAID IT HAS CON­TACTED A SUB­STAN­TIAL MA­JOR­ITY OF THE ROUGHLY 870 AF­FECTED CUS­TOMERS TO PRO­VIDE RE­ME­DI­A­TION.

Photo cour­tesy Diana John­son

Diana John­son said she and her hus­band, Harold, strug­gled to make pay­ments on a Wells Fargo mort­gage for their home in up­state New York, which they ul­ti­mately lost. The fam­ily now live in Char­lotte.

RICHARD DREW AP file photo

The Wells Fargo logo ap­pears above the floor of the New York Stock Ex­change. The Wall Street Jour­nal re­ports the Jus­tice Depart­ment is in­ves­ti­gat­ing po­ten­tial em­ployee fraud at Wells Fargo's whole­sale bank­ing unit.

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