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Chase, Wells Fargo Mortgage Fee Abuse Class Action Lawsuit
By Sarah Pierce
Wells Farg
o and JPMorgan Chase have been hit with a class action lawsuit alleging that the two lending giants cheated hundreds of thousands of borrowers who were late on mortgage payments by charging excessive and abusive default fees.
The class action lawsuit claims Wells Fargo and Chase charged homeowners over-inflated fees once they began to fall behind in their mortgage payments, sometimes by as much as 300 percent. Together, the two lenders service approximately 25 percent of all U.S. mortgages, which means they may have potentially defaulted borrowers out of a billion dollars or more, attorneys for the Class estimate.
“Loan agreements require that default-related services must be reasonable and appropriate,” said an attorney representing the Class. “Banks are not allowed to mark up the charges so they can make a profit, but that is exactly what they have done.”
The amount of the inflated or unnecessary charges the banks charge can very, running as low as $20 to as much as $135, the class action lawsuit says. The fees are charged when a borrower is late on a payment, and the bank’s computer programs begin the default process by levying fees against the borrower.
In addition to charging unnecessary and marked-up fees, the class action lawsuit says the banks concealed the fees through “cryptic wording.” These fees are typically listed on a borrower’s monthly statement as “other charges,” “miscellaneous charges” or “corporate advances” in an attempt to hide the true nature of the charges, the class action lawsuit says.
According to the class action lawsuit, one of these fees the banks charge is used to hire a real estate broker to assess the value of the home based on similar properties. The real estate agent’s assessment is called the broker’s price opinion (BPO) and is used to help the lender price the property for foreclosure.
Federal law allows lenders to charge these BPO fees, but they are not allowed to mark up the charges or perform unnecessary services and make a profit, which is what Wells Fargo and Chase have done, according to the suit.
“Our investigation has revealed that as a result of these practices, banks often make more money from loans that are in default than loans that are current,” a Class attorney said. “Loan agreements require that default-related services must be reasonable and appropriate.”
The Wells Fargo and Chase RICO class action lawsuit is brought on behalf of all U.S. residents who had a loan serviced by Wells Fargo or Chase and whose accounts were assessed fees for default-related services, including Broker’s Price Opinions, and inspection fees, at any time, continuing through the date of final disposition of this action.
The case is Latara Bias, et al., v. Wells Fargo & Company, JPMorgan Chase & Co., et al., Case No. 12-cv-0664, U.S. District Court, Northern District of California.
UPDATE: On Oct. 31, 2016, Wells Fargo agreed to pay $50 million to settle a class action lawsuit claiming they imposed excessive and abusive fees on borrowers who were late on their mortgage payments.
UPDATE 2: The Wells Fargo Mortgage Fee Class Action Settlement is now open! Click here to learn more.
Updated February 27th, 2012
All class action and lawsuit news updates are listed in the Lawsuit News section of Top Class Actions
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29 thoughts onChase, Wells Fargo Mortgage Fee Abuse Class Action Lawsuit
please contact me. I am in middle of trying to get these fees removed.
Ever since we took out a home equity loan(at the time house appraised for 475k loan amount 109k no first mortgage so when Wells and Chase began servicing the loan from GMAC, all of these unapplied and other charges appeared including inspection fees however since the payments partially went to \other charges which would incur a higher payment and late fees on following statement, in 2010 alone overpaid $15600. Towards unapplied or other charges and they still are foreclosing on my home eventhoughI never missed a payment, only after my attorney and 2 other attorneys were suspended by the FLorida Supreme Court Wells Fargo attacked like vultures and after litigating for 4 years, I was unable to get a continuance even though I hired another attorney who had no time to prepare,the judge denied all continuances that morning based on tired of hearing atty suspended excuse. Now Wells turned down modification and after 20 years and paid cash initially,My children and I are losing our home. :(
Several friends and I each have a home mortgage dating back to 2004 when we all re-financed our loans. None originated with Chase but, at various times, all four have had the servicing taken over by Chase. All have prefect payment histories. Recently, all had “Corporate Advance Fees” applied to the account in the same month. Supposedly, these were for multiple Broker Price Opinions (BPOs) and other service items dating back six to ten years ago. But Chase wasn’t servicing the loans at those times and the fees didn’t appear until three years after Chase took over!
We’ve asked for copies of the invoices to support these fees. No response so far and I’m not holding my breath while waiting.
This behavior matches my definition of fraud. With no documentation, these invented fees will sit on any mortgage account until the homeowner attempts to discharge the loan. Then, the homeowners pays.
I wonder if every Chase loan has such fees. Check your monthly statement. If you see such a fee, demand documentation or fee removal.
My Chase Loan has these fees every month. It will show a Corporate advance payment made in the positive of an (x) amount followed by a negative amount equal to the (x). I have made several calls about these strange advances and withdraws on my account and have never been given a straight answer.
I too have lost my home due to Chase and Wells Fargo wrongfully foreclosed after I requested a loan modification due to my not working. I am interested in the class action law suit.
Please add me to this lawsuit
I’m dealing with the same thing…they have over $4,000 in an account being held and not applied to the loan. I ask questions but Wells Fargo can’t answer them. I call the attorney and they indicate I haven’t paid since January of this year (which is FALSE) no wonder I’m in “delinquent” status!!! When really I’m only a month and a half late.
I am going through all the above plus MORE! They lied about reaffirmation agreement when I suffered a financial loss. They doubled late fees on motions to the US Courts! They took late fees; inspection fees listed as other charges and would not answer my questions as to what these charges were for. They took attorneys fees first and my account was always put into suspension! They stated I owed over $1400 in corporate fees! Please I want in on a class action lawsuit. I was also advised to file a civil lawsuit against them for their fraudulent actions and to take action against “STEPHEN BAUM ‘s office for NOT completing the reaffirmation”
This company has ruined my life! My credit!
any information would be welcomed!
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Wells Fargo. Aka hells fargo. Let my payment sit as unapplied funds for being the wrong amount…which is the amount the asked for… my payment changed for no reason. I called and asked why they couldn’t explain …..aI payed what was on the billhead. They didn’t apply it to my loan I have late fees on it. Ect
How do you become involved in the lawsuit?
I will most likely be included in this class action suit. I just wish this suit also included situations where the lender (in my case, Wells Fargo), purposely HELD 2 full monthly mortgage payments (totaling over $2800 including late fees) that we had sent (albeit, late). When we called them on it, they claimed those 2 payments were put in a “suspension account,” forcing us to remain delinquent. We’ve since have had no choice but to move out of the house and let them foreclose on us.