$30M Wells Fargo FHA Mortgage Settlement Gets Green Light

Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.

Last week, a California federal judge gave initial approval to a $30 million class action settlement over allegations Wells Fargo Bank NA charged interest to home loan borrowers after they paid off their FHA-insured loans.

Plaintiffs Vana Fowler and Michael Peters claim Wells Fargo unlawfully collected post-payment interest on mortgages insured by the Federal Housing Administration because it failed to provide proper notice to borrowers.

Instead, the bank allegedly used its own unauthorized form that did not fairly disclose terms under which Wells Fargo can collect post-payment interest or inform borrowers how they could avoid the charges.

According to the Wells Fargo class action lawsuit, Wells Fargo’s form suggests that borrowers must pay post-payment interest through the end of the month. The plaintiffs say this policy caused them to be charged interest twice: once by Wells Fargo and once by the new lender after refinancing.

Class Members of the Wells Fargo settlement include anyone in the United States who had an FHA insured loan originating between June 1, 1996 and Jan. 20, 2015, in which Wells Fargo (or its agent or predecessor) held the mortgage on the date the total amount due on the loan was brought to zero, and in which Wells Fargo collected post-payment interest on the loan, and where the borrower maid an inquiry but did not receive a payoff statement with the post-payment interest disclosure language contained in the Housing Handbook.

More than 1 million Wells Fargo borrowers may qualify as Class Members of the FHA mortgage settlement.

Under the terms of the Wells Fargo class action settlement, Class Members will be entitled to an award proportional to the amount of post-payment interest collected in connection with their loan compared to that of all other Class Members.

U.S. District Judge Haywood S. Gilliam Jr. noted that certifying a nationwide Class could pose a challenge because the plaintiffs asserted breach of contract claims under the state laws of each state. The plaintiffs argued that the three elements of a breach of contract claim (existence of contract, breach, and damages) in each state apply identically to the alleged breach.

“For the purposes of the settlement, given the high-level similarities in the law of each state as to the asserted claims, and because Defendant’s procedures were uniform as to all class members, the Court finds the predominance requirement is satisfied for purposes of provisional class certification,” the judge wrote in his order preliminarily approving the Wells Fargo FHA mortgage class action settlement.

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

The plaintiffs are represented by Michael F. Ram and Susan S. Brown of Robins Kaplan LLP, Kevin E. Epps and Adam L. Hoipkemier of Epps Holloway Deloach & Hoipkemier LLC, and Samuel Strauss of Turke & Strauss LLP.

The Wells Fargo FHA Mortgage Class Action Lawsuit is Fowler v. Wells Fargo Bank NA, Case No. 4:17-cv-02092, in the U.S. District Court for the Northern District of California.

UPDATE: October 2018, the Wells Fargo FHA loan interest class action settlement is now open. Click here for more information.