Wells Fargo Class Action Says Mortgage Modification Unfairly Denied

A homeowner alleges in a class action lawsuit that Wells Fargo wrongly denies mortgage modifications, leading to foreclosures.

Lead plaintiff Alicia Hernandez claims in her class action lawsuit that she and other Wells Fargo mortgage holders lost their homes to foreclosure after the bank unfairly denied their applications for mortgage modifications.

Hernandez contends that Wells Fargo did this in violation of the Home Affordable Modification Program (HAMP), enacted in the aftermath of the Great Recession of 2008 that left millions underwater on their mortgages.

“Wells Fargo accepted up to $6.4 billion in HAMP funding, but failed to fulfill its obligations and duties to its customers under HAMP’s loan modification program,” the Wells Fargo class action states.

The plaintiff says that she lost her home due to Wells Fargo’s errors in processing her application for a mortgage modification.

“Plaintiff Alicia Hernandez was the exact type of person whom HAMP was supposed to help. Prior to 2008, she was working full-time and bought a condo in North Bergen, New Jersey,” states the Wells Fargo class action lawsuit.

“When the recession hit, however, she lost her job to downsizing and needed the help that HAMP was supposed to provide. Rather than extend a HAMP modification, Wells Fargo miscalculated and initiated foreclosure proceedings. Ms. Hernandez fought foreclosure pro se for years, but in the end, she was foreclosed on.”

According to the Wells Fargo class action lawsuit, the bank developed its own software for verifying borrower eligibility for the program, despite the availability of a federal tool.

As a result of errors in Wells Fargo’s tool, the bank improperly foreclosed on hundreds of homeowners, the plaintiff claims.

“Losing your home through a foreclosure is one of the most disruptive events that you could experience,” points out the plaintiff in the Wells Fargo class action lawsuit.

“Wells Fargo now admits that this tool caused systematic miscalculations that led to Wells Fargo wrongfully denying loan modifications to over 870 borrowers who qualified for a loan modification under HAMP,” continues the Wells Fargo class action.

“Of those, Wells Fargo admits it foreclosed on 545 borrowers when it should have instead offered them a loan modification.”

Mortgage modifications can help take pressure of homeowners facing unexpected financial instability due to job loss, medical, or other expenses.

According to the Wells Fargo mortgage class action, mortgage modifications can substantially reduce mortgage payments – allowing people to stay in their homes.

The Wells Fargo class action lawsuit says the bank, as a part of its campaign to win back consumers after a number of scandals, admitted its tool miscalculated mortgage modification applications.

Hernandez says that the bank sent her a check for $15,000 to “make things right.”

This amount, however, does not nearly amount to “full and fair compensation” for the loss of her home to Wells Fargo’s faulty calculations, alleges the Wells Fargo foreclosure class action lawsuit.

The Wells Fargo class action lawsuit seeks to represent a Class of homeowners who lost their homes after the bank miscalculated and denied their mortgage modification applications.

The plaintiff contends that there are at least 870 Wells Fargo mortgage holders eligible for the proposed Class.

The plaintiff is seeking damages for herself and Class Members.

Hernandez is represented by Michael L. Schrag and Joshua J. Bloomfield of Gibbs Law Group LLP and Richard M. Paul III and Ashlea G. Schwarz of Paul LLP.

The Wells Fargo Mortgage Modification Class Action Lawsuit is Hernandez v. Wells Fargo Bank NA, Case No. 3:18-cv-07354, in the U.S. District Court for the Northern District of California.

UPDATE: On Jan. 29, 2020, a federal judge in California certified a national Class of Wells Fargo mortgage customers who claim the bank denied them mortgage modifications, despite meeting the requirements for the Home Affordable Modification Program (HAMP.)

UPDATE 2: On March 19, 2020, a judge rejected Wells Fargo’s effort to stay a class action lawsuit, saying the bank did not notify some borrowers about mortgage modification options.

UPDATE 3: May 2020, the Wells Fargo mortgage class action settlement is now open. Click here to file a claim.