Sometimes, mortgage holders fall behind on payments. When this happens, many mortgages have within them provisions that allow home inspections to be done, saddling homeowners with home inspection fees that they did not know they owed.
Unexpected Home Inspection Fees
When a homeowner cannot pay his or her mortgage, often the bank wants to make sure the home is still occupied and that it is not under disrepair. There are clauses in many mortgages that allow banks to order home inspections when mortgage payments are not made.
However, if there are home inspection fees associated with these home inspections, they are often passed along to the borrower. Many times, borrowers have never been made aware that they may have to contend with extra home inspection fees. Most standard mortgages only allow these home inspection fees if they are appropriate or reasonable.
Some of the banks suspected of charging improper home inspection fees include Caliber Home Loans, Quicken Loans, U.S. Bank, LoanDepot, Freedom Mortgage, Flagstar and Seterus.
Home Inspection Fees Settlement
Recently, Wells Fargo submitted to a $25.7 million Wells Fargo inspection fee settlement to take care of a RICO class action lawsuit regarding unlawful home inspection fees. The homeowner plaintiffs asked an Iowa federal court to approve this Wells Fargo inspection fee settlement, claiming that the bank ordered unnecessary property inspections and charged delinquent borrowers unfairly.
According to Law360, this group of borrowers “asked the judge on Tuesday to grant final approval of the agreement that comes after seven years of litigation of claims that Wells Fargo violated the Racketeer Influenced and Corrupt Organizations Act by ordering repeated property inspections and concealing the nature of charges to delinquent borrowers for the service.”
The Class of homeowners was satisfied with this proposed $25.7 million Wells Fargo inspection fee settlement because, in their words, it “benefits the class by conferring a guaranteed, immediate, and substantial benefit of $25,750,000 and avoids the risks and expenses of continued litigation, including the risk of recovering less than the amount of the settlement fund after substantial delay or of recovering nothing at all.”
During the case, Wells Fargo claimed that they were not incentivized to make the order for unnecessary home inspections charging unlawful home inspection fees because they did not overcharge for the home inspections. Wells Fargo also argued that it risked receiving fines and sanctions if it did not complete the proper amount of home inspections, resulting in home inspection fees.
In this case, the court approved the $25.7 million Wells Fargo inspection fee settlement as well as the makeup of the proposed Class. This proposed class could potentially include 2.7 million homeowners.
A Wells Fargo spokesperson told Law360 in an email, “While we believe Wells Fargo’s handling of property inspection fees for mortgage borrowers in default was appropriate, we are pleased to have reached a preliminary agreement to resolve the case, and avoid further litigation and expense.’”
This Wells Fargo Inspection Fee Settlement is Huyer, et al. v. Wells Fargo & Co., et al., Case No. 4:08-cv-00507, in the U.S. District court for the Southern District of Iowa.
Join a Free Property Inspection & Broker Price Opinion Class Action Lawsuit Investigation
If you were in default on your mortgage in the last three years with one of the following banks, you may qualify to join this property inspection fee class action lawsuit investigation:
- Caliber Home Loans
- Flagstar
- Freedom Mortgage
- LoanDepot
- Quicken Loans
- U.S. Bank
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4 thoughts onHomeowners in Default Could Be Charged Improper Home Inspection Fees
Please add my name to this law suit
Is Ocwen involved because I have proof they did it.
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