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Wells Fargo is facing two class action lawsuits from customers who thought they were signing up to get information about their mortgage forbearance options and ended up getting actual forbearances instead.
The customers are suing because they say the bank’s actions put their credit ratings at risk and prevented them from refinancing their home loans now that interest rates have been lowered due to the coronavirus pandemic and national financial crisis. The most recent of the class action lawsuits was filed on Aug. 26.
Congress passed the Coronavirus Aid, Relief, and Economic Security or CARES Act in March, which, among other things, allowed those with federally backed mortgages to have their home loans placed in forbearance – meaning the mortgage would be frozen and payments suspended without penalty. The default length of a mortgage forbearance under the act is 180 days. Customers may request the forbearance be shortened at any time, or lengthen after the first 180 days.
Shortly after the CARES Act was passed, Wells Fargo began receiving phone calls and online requests for detailed information about the mortgage forbearance option.
According to the plaintiffs, the bank began automatically placing the mortgages of countless of those callers into forbearance without the customers realizing it, let alone wanting it.
Mortgage holders Samara Green of Georgia and Brett Jacob of New York joined forces in filing the first class action lawsuit against Wells Fargo on July 31 in the U.S. District Court of California. The second class action lawsuit was filed at the same court by Pamela Delpapa of California.
All three plaintiffs claim their mortgages were placed in forbearance by Wells Fargo without their express consent. Both mortgage forbearance class action lawsuits refer to several complaints to the U.S. Consumer Financial Protection Bureau by even more customers who told of similar experiences.
One of those customers reportedly said a Wells Fargo employee admitted that the bank’s system was set up “like a hair trigger,” automatically placing loans into forbearance, “even though I did nothing to start a forbearance,” the Delpapa class action lawsuit says.
Although the CARES Act was meant to be helpful to borrowers in a time of serious financial hardship brought on by the coronavirus pandemic, the mortgage forbearance policy at Wells Fargo wound up “hurting the very people Congress intended to help,” Delpapa says.
In her case, Delpapa said she lost her job and then, because of the automatic forbearance, was unable to refinance her home loan with a lower interest rate.
In her class action lawsuit, Green said her mortgage had also been placed in forbearance without her knowledge or consent and the bank had failed to apply at least one Wells Fargo mortgage payment she’d submitted before finding out the loan was frozen. Plaintiff Jacob told of a similar experience.
The Delpapa and Green class action lawsuits also claim Wells Fargo stood to benefit from the automatic forbearances though the collection of fees.
“In the spirit of providing assistance, we may have misinterpreted customers’ intentions in a small number of cases,” Mary Eshet, a spokeswoman for Wells Fargo, said according to a report by NBC News. “In those limited cases, we are working directly with customers to ensure they are receiving the assistance they need and make any corrections to their accounts that may be required.”
The Wells Fargo spokeswoman went on to say that all customers who had their mortgages placed in forbearance in error were notified and then able to request the forbearance be lifted.
However, the plaintiffs argue that “Wells Fargo’s blunder is not an inconsequential administrative glitch.”
“Forbearance can have grave impacts on a borrower’s credit history or access to credit,” the Delpapa class action lawsuit says.
The Wells Fargo class action lawsuit goes on to note that two U.S. senators who became aware of the Wells Fargo mortgage forbearance situation wrote a letter of concern to the bank’s top executive because they considered it a serious matter,
“As Sen. Elizabeth Warren (D- Mass.) and Sen. Brian Schatz (D-Hawaii) wrote in a letter to Wells Fargo CEO Charles Scharf, the bank was ‘putting consumers at risk of greater financial hardship amidst one of the worst economic downturns in our country’s history,’” the Delpapa class action lawsuit says.
Are you a Wells Fargo customer whose mortgage has been placed in forbearance by the bank without your knowledge or consent? Has your mortgage with another bank been put in forbearance against your wishes? Tell us about your experience in the comment section below.
Class Members in the Delpapa class action lawsuit are represented by Matthew J. Preusch, Derek W. Loeser and Gretchen Freeman Cappio of Keller Rohrback LLP. Class Members in the Green class action lawsuit are represented by Abbas Kazerounian, Yana A. Hart and Jason A. Ibey of Kazerouni Law Group APC.
The Wells Fargo Mortgage Forbearance Class Action Lawsuits are Delpapa, et al. v. Wells Fargo Bank, Case No. 3:20-cv-06009, and Green, et al. v. Wells Fargo & Co., et al., Case No. 3:20-cv-05296, both in the U.S. District Court for the Northern District of California.
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30 thoughts onWells Fargo COVID-19 Mortgage Forbearance Policy Sparks Suit
Loan originated with Wachovia then “sold” to Wells Fargo.
For the last several years the rate has been at 7.75 percent…
I tried two times with Wells Fargo to modify the loan over four years. Each time I was required to miss payments (default on the loan) in order to qualify for starting the formal modification process. Each time my credit report / rating took a huge hit making refinance with another lender impossible. Each time I ended the process by paying the past due amount in order to avoid imminent foreclosure. Each time the formal lengthy modification process resulted in no change to the loan or annual rate… putting me closer to foreclosure.
After a covid related bait and switch program I am still stuck with the same loan along with a required balloon payment of $114,000.00 to bring the loan current… again destroying my credit report making refinance with another lender impossible…
Wells Fargo repeatedly told me that all required payments due during the covid protection period would be placed at the end of the loan with no penalty. This did not occur.
Would like to join this suit…
Please place me on the same list as I was told that we were covered undfer the CARES Act and all my missed payments would be placed on the back end of my loan without any penalty than placed on the forbiddance without my consent and I have called them now they tell me I have missed 18 months in payments and want me to sign a modification for them to add almost 20k my loan when my loan was current, never had a missed payment in 9 years, plus want to add 20 years to my loan, that takes all my equity out of my house. I only owe 123k , 182,500, put 20% down initially and my house is worth upwards of 450k and I am facing Foreclosure but not in it yet so please direct me. I need help please I don’t want to lose the biggest investment I have, everything I have, I am willing to sell my property by myself and pay off my loan and acquire my equity out of my house but I would be a fool to sign the modification, I am not willing to sign the modification as I was Covered by the CARES act and am only down 2 payments which I can get current, there is no reason for them to add an additional 20 as we were told out loan got places on pause and we would just move forward after the end of the CARES ACT with no interest etc… so my loan should still be at 123 which is what I owed when the Cares ACt came into place not 143 as the loan was placed on pause and only for 18momths so my loan time frame should change by 18months tyhats it is and was my understanding.
OMG this EXACTLY what they did to me. It’s still going even though I resumed my payments for the last 9 months, had a perfect payment record for 7 years prior to going on the payment suspension, signed and notarized the “Partial Claim” documents they sent to me last year in November 2021, which stated the missed payment amount would be moved to the end of my loan with no interest, no penalties, no loan modification. Yet, they continue to harass me even though I followed everything they told me to do in writing. They have tacked on $4k, will not adjust my mortgage to the actual amount, will not apply my last 9 payments made between November 2021-July 2022, and are now denying me what they offered and agreed to in the legal and binding documents I signed and sent to them 9 months ago. I literally can’t take the harassment anymore. Have you been able to resolve anything since you wrote your comment above in December 2021?
Same exact thing happening to me. A forbearance period inflated my mortgage from $281K to $361K , with made uo math processes
These thieves are robbing me blind. I need legal help , this is a total scam
Yes, I would like to become a part of this lawsuit! Well Fargo has put my 12 months of “Covid 19 Crisis Deferral Relief”. My mortgage was$702.00 per month. $200 of that was for my property taxes and insurance which I paid every months myself. Which means that $500 was all I had deferred to the back of my book. I paid $2400.00 into my escrow account, which they can not find? They claimed that they paid my taxes and insurance and not only put $702 x 12 into forbarnce (which inclued my taxes and homeowners insurance) but also and additional $2,000 into forbarence for my taxes and homeowners insurance stating they paid it yet there was a $350. shorthage bringing my new mortgate payment to $729.00 per month (for the shortage) which I denied but they would not listen to me and/or help me.
Fortunately, I have an accounting of my Escrow account and the $200 I paid in every month for 12 months was sent to unappplied funds and I owe more now on my mortage than I did 5 years ago when I first purchased my home. I have been fighting with them for the past two months to no avail. I do have all of the documentations and the approval for deferrment from them though I am now carrying what looks like a 2nd mortgage loan of colse to $9000.
I can do nothing about it and they will not help me. They can just steal my money, hide it in their books, close it out and it’s gone forever and I have to pay them more than I did when I first bought my home in 2017 for 1 year of COVID-19 Deferral Crisis assistance?
More like a great way to steal peoples money and no one will do anything about it. I did send all my documentation to the Consumer Finance Protection Burea but have not heard back from them either.
I also had my payments suspend. I was reading info online logged into my mortgage account I didn’t request it. My bill comes and nothing was due. When i called i waa told It would not affect my credit, I interest or monthly payments. And they will just add it to the end of your mortgage loan. When the program came to an end i get my mortgage bill for over $11,000 due immediately. If I got assistance how would I come up with $11,000 plus my mortgage that month. I’ve spoke to them and was.l told to check the ct.gov and they will have info and assistance. Why would my mortgage company help me? Now I am in pre foreclosure. I had some late.paymente but they always got paid. When you own your own company payments don’t come every week so yes some were late but they got their money, usually within the 16 day grace period. I was not in pre foreclosure prior to them ‘helping the homeowner out during rough times” so I get charged interest for not paying the $11,000 when the forbiddence program ended. Far from what I was told.
Wells Fargo is a horrible bank. I specifically told them i do not want a forbearance. i was trying to refinance and get away from them and it was added on my report anyway. WF also put on my credit report i was late 5 times in a year now we all know 5 months is extremely to long for them they will foreclose in 3 months. FannieMae need to cut the damn strings .
Add me to the case I have been filling complaints with several institutions regarding Wells Fargo‘s predatory lending practices and discrimination