A class action lawsuit claims Wells Fargo Bank, “through a deceptive pattern and practice going back years” fraudulently charges people buying back their foreclosed homes with unused hazard insurance premiums.
The Kansas plaintiffs allege Wells Fargo takes part in a scheme that takes advantage of homeowners by adding the cost of hazard insurance to the redemption price of foreclosed homes.
“Wells Fargo is unjustly enriching itself and misleading persons who are at their most financially vulnerable— homeowners who just lost their homes in foreclosure proceedings and are trying to struggle back and recover their homes,” the complaint claims.
Wells Fargo bought the plaintiffs’ homes in foreclosure proceedings starting back in 2012. During the process of buying back the properties, the plaintiffs say Wells Fargo tacked on “additional expenses in maintaining and preserving the property” to the price.
Kansas law, according to the filing, allows homeowners under a foreclosure judgement to redeem their properties within three months or a year, depending on the balance remaining on the loan.
“Sometimes [Wells Fargo] purchases hazard insurance to protect the property following the sale,” the complaint explains. “Wells Fargo typically buys coverage for a full year even though insurance can be purchased for shorter periods of time,” adding that policies can be as short as a month.
The class action lawsuit centers around Wells Fargo not disclosing the specifics on these hazard insurance policies and not returning the unused premiums, as is the standard practice, the filing asserts.
“The redeeming homeowner is unwittingly charged that entire cost as part of the redemption even when the redemption occurs less than 12 months after the foreclosure,” according to the class action lawsuit.
Even more, the plaintiffs say these year-long hazard insurance premiums are never prorated after the home is redeemed.
“Wells Fargo and its counsel willfully and intentionally decide as part of their wrongful scheme to not prorate hazard insurance,” the plaintiffs said.
As a result, the plaintiffs were “charged that entire cost” of a year-long hazard insurance policy despite the properties being redeemed months before, the class action lawsuit claims.
These funds are an “underserved windfall” for Wells Fargo, according to the complaint, that are “fraudulently obtained” and “rightfully belong to the homeowners.”
These extra amounts in hazard insurance premiums are not trivial, the plaintiffs contend, sometimes totaling several thousand dollars.
Jerry and Mary Speer claim Wells Fargo charged them more than $2,800 in unused hazard insurance premiums when they redeemed their property in 2013. Jonathan and Alexious Moehring redeemed their home in 2017 and say they paid an extra $1,111.
The complaint cites a similar case involving Wells Fargo and hazard insurance premiums.
In Wells Fargo, N.A. v. Taylor-Hinds, a third-party noted Wells Fargo was not documenting various expenses in foreclosure redemption sales. When pressed on the issue, Wells Fargo never provided that documentation and didn’t comment on prorating hazard insurance, according to the plaintiffs.
The judge hearing that case eventually ordered the bank to prorate those premiums.
Even more, according to the class action lawsuit, Wells Fargo appears to be inconsistent with how it charges for hazard insurance. The filing claims that foreclosed-upon homeowners who had engaged the services of a lawyer are not billed for the full year.
“Notably, when redeeming parties are represented by counsel (as in Taylor-Hinds), they have the ability to contest the excessive premium charges and, ultimately, only pay a prorated amount for insurance,” the class action lawsuit states.
“Unfortunately, many redeemers are the foreclosed homeowners themselves, who almost by definition do not have the financial resources to retain counsel—a fact undoubtedly known and exploited by Wells Fargo.”
Formally, the plaintiffs are accusing Wells Fargo with unjust enrichment, fraudulent and negligent misrepresentation and fraud by silence.
Have you taken out a hazard insurance policy with Wells Fargo? Were you refunded a prorated balance or not? Let us know in the comments below.
Counsel representing the plaintiffs in the hazard class action lawsuit are Bradley T. Wilders, Michael R. Owens of Stueve Siegel Hanson LLP; Paul D. Snyder and Karen E. Snyder of Snyder Law Firm LLC.
The Hazard Insurance Class Action Lawsuit is Moehring, et. al v. Wells Fargo Bank, et al., Case No. 2:20-cv-02506, in the U.S. District Court for the District of Kansas.
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3 thoughts onWells Fargo Hazard Insurance Fees On Foreclosures Fraudulent: Class Action Lawsuit
Add me please. Just lost our home to wells fargo and all the extra costs the tacked on.
Wells fargo mortgage in 2006 was$86,000. Went up to $200,000. For 6 modifications but now wells fargo say only in 3. The file for foreclosures three times adding fees to back of loans.
Finally filed for bankruptcy in 08/2019 still active