Wells Fargo Pushes for Late Fee Class Action Decertification

On Jan. 9, a group of mortgage lenders owned by Wells Fargo Co. asked the presiding New York federal judge to decertify the Class of Wells Fargo homeowners, claiming the plaintiffs cannot prove an important requirement for Class certification  in the Wells Fargo late fee class action lawsuit.

In December 2014, a New York federal jury ruled that Wells Fargo & Co. was mandated to pay $54.8 million in damages to resolve claims that mortgage servicers owned by Wells Fargo improperly and excessively charged late fees to a number of Wells Fargo home owners after the lenders accelerated the consumers’ loans without consent.

In response, the defending Wells Fargo Lenders consisting of Homeq Servicing Corp., TMS Mortgage Inc., and The Money Store alleged that the late fee class action lawsuit plaintiffs are not able to prove that all Wells Fargo Class Members’ loans were accelerated on a class-wide basis, especially considering that the homeowners were not required to make payments on the loan’s principle for the first 90 days. The defending companies allege that if the plaintiffs were to attempt to prove their Class claim, an examination of every single borrower’s loan file would be required.

Homeq, TMS Mortgage, and The Money Store further allege that the plaintiffs’ expert witnesses relied on the assumption that the alleged loan acceleration occurred after 90 days without loan payments by borrowers. According to their motion to decertify the Wells Fargo late fee Class:

“The trial has shown that recovery by the post-acceleration late fee class would require individualized proof that the holder of the specific note actually took clear, affirmative action, i.e., gave effective, valid notice in accordance with case law as well as specific requirements in the form loan agreements. No classwide proof of acceleration was offered or even attempted at trial.”

In filing the motion to decertify the Wells Fargo late fee Class, the defending mortgage companies argue that the only reason the Class was certified in 2013 was based on the plaintiffs’ assertion that they had a plan to prove classwide loan acceleration, a plan which the defendants’ claim never existed.

In terms of the alleged loan acceleration, Homeq, TMS, and Money Store say that the debt acceleration was not automatic. Instead, the defendants claim they had to provide a notice to the borrowers informing them of the intent to accelerate and demand the remaining debt on the loan after the borrower defaulted on said loan.

Money Store and the other three Wells Fargo-owned defendants claim that the plaintiffs have also neglected to demonstrate a classwide contractual relationship with these companies. To prove a classwide contractual relationship beyond simply being a loan servicer, the defendants allege would also require exhaustive individual examination.

The three defending mortgage lenders stopped originating loans in 2001, meaning that all new loans serviced by these companies after 2001 were originated by other mortgage lenders. However, the Wells Fargo late fee Class consists of borrowers who filed mortgages owned or serviced by the Wells-Fargo-owned companies beginning in March 2000. These loans were then allegedly accelerated and the borrowers were subsequently charged a late fee.

The plaintiff is represented by Moshe Horn and Christopher M. Van de Kieft of Seeger Weiss LLP, Paul Grobman of the Law Offices of Paul Grobman, and Neal A. DeYoung and H. Rajan Sharma of Sharma & DeYoung LLP.

The Wells Fargo Late Fee Class Action Lawsuit is Joseph Mazzei, et al. v. the Money Store, et al., Case No. 1:01-cv-05694, in the U.S. District Court for the Southern District of New York.