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Wells Fargo has agreed to pay $880,000 to settle a class action lawsuit that accused the banking company of violating the Truth in Lending Act by failing to notify participants of property insurance proceeds.
Lead plaintiff Latasha McLaughlin alleged in the class action lawsuit that Wells Fargo failed to disclose to mortgage holders that there were property insurance proceeds available to help make payments before borrowers went into foreclosure.
Wells Fargo failed to convince the Ninth Circuit to hear their interlocutory appeal of the certification of two Classes in the case.
The $880,000 payout is approximately 88 percent of what the plaintiffs could have won for their statutory claims, according to U.S. District Court Judge William Alsup. Judge Alsup granted preliminary approval of the settlement proposal to distribute the settlement evenly among mortgage holders whose loan statements did not include a disclosure about their property insurance proceeds.
“Given that this proposed settlement agreement comes after over a year of litigation, discovery, and motion practice, both sides have had ample opportunity to carefully assess and weigh the relative strengths and weaknesses of their legal positions,” the judge said. “The discounted payout seems to reflect those considerations.”
According to the complaint filed in 2015, Wells Fargo failed to tell McLaughlin that she had insurance proceeds available when she fell behind in her mortgage payments after her home flooded.
Instead, the plaintiff said in her complaint that Wells Fargo referred her mortgage for foreclosure. The plaintiff further alleged that she had requested a written payoff statement from Wells Fargo, but the available insurance proceeds weren’t included on that statement.
Two Classes were certified by Judge Alsup. These classes include people who had mortgages services owned by Wells Fargo who received payoff statements from Wells Fargo that didn’t include a disclosure of their insurance claim funds. The Classes also include people with Wells Fargo mortgages whose insurance proceeds are being held by the bank.
“[Wells Fargo] has an obligation to prepare ‘payoff statements’ that set forth the amounts required to fully satisfy all obligations secured by the loan,” the Wells Fargo class action states.
“[Wells Fargo’s] failure to account for such funds has the effect of overstating and exaggerating the obligations of Plaintiff and the members of the Class under their respective mortgage agreements,” McLaughlin stated. “[Wells Fargo’s] conduct prejudices Plaintiff and the members of the Class because the payoff statements are the foundational documents for many critical events, including loan modification, loan refinancing, and in foreclosure proceedings.”
Wells Fargo tried to appeal Judge Alsup’s certification of the Class, but the Ninth Circuit refused to hear the appeal. The plaintiffs alleged that the bank was trying to delay the class action as long as possible.
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 Class is represented by Patricia I. Avery, Matthew Insley-Pruitt and Adam J. Blander of Wolf Popper LLP and by Joseph J. Tabacco Jr., Kristin J. Moody and A. Chowning Poppler of Berman DeValerio.
The Wells Fargo Mortgage Disclosure Class Action Lawsuit is Latasha McLaughlin v. Wells Fargo Bank NA, Case No. 3:15-cv-02904, in the U.S. District Court for the Northern District of California.
UPDATE: The Wells Fargo Mortgage Disclosure Class Action Settlement is now open! Click here for more details.
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UPDATE: The Wells Fargo Mortgage Disclosure Class Action Settlement is now open! Click here for more details.