Wells Fargo Should Pay Extra $22M to Additional Customers Who Lost Their Homes Due to Software Error, Judge Says

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Wells Fargo should pay an extra $22 million to compensate additional mortgage customers who lost their homes when the bank wrongly denied them loan modifications, after an $18.5 million deal was struck with initial claimants. 

A judge gave early approval to the supplemental settlement between Wells Fargo home loan borrowers and the bank, after the court became aware of more Class members, Law360 reported.

The plaintiffs allege they were wrongly denied loan modifications due to a software error, which forced them into foreclosure. 

U.S. District Judge William H. Alsup said the more-than $21.8 million extra settlement is to cover an additional 741 Class members that weren’t included in Wells Fargo’s first list of borrowers provided to the court. The initial settlement is for $18.5 million.

“After new class members were identified, the parties agreed to the supplemental settlement which provides new class members compensation for economic harm using the same formula as in the first settlement,” Judge Alsup reportedly said. 

“The supplemental settlement also provides new class members the same opportunity to apply for additional settlement amounts for severe emotional distress.”

The class action lawsuit alleges that, from 2010 to 2018, homeowners who should have qualified for a home loan modification were denied assistance due to a software error.

The bank said it discovered the software flaw in 2013, but a related error persisted through 2018, continuing to impact customers.

The bank made the information public, sent apology letters to affected homeowners and offered between $5,000 and $15,000 to some, the settlement reportedly says.

According to the settlement, Class members will get a portion of the millions depending on the estimated value of the property they lost due to the bank’s software error. It is estimated each home loan customer will get between $14,000 and $120,000, Law360 reported.

The settlement also includes $1 million for those who experienced “severe emotional distress” due to losing their homes. 

Wells Fargo is the fourth largest bank in the United States based on assets. The financial corporation has often found itself facing consumer backlash regarding alleged unfair operations of the bank, potential unethical practices, and more, which have resulted in a range of class action lawsuits being filed. 

The Wells Fargo lawsuit filings follow claims of the bank unfairly repossessing property, customers receiving mortgage forbearances they didn’t ask for, customers being wrongfully denied home loan modifications, and more. Click here for the latest Wells Fargo class action lawsuits. 

What do you think about this settlement with Wells Fargo? Let us know in the comments! 

The borrowers are represented by Michael L. Schrag, Joshua J. Bloomfield and Linda P. Lam of Gibbs Law Group LLP; and Richard M. Paul III and Laura C. Fellows of Paul LLP.

The Wells Fargo Home Loan Modification Error Class Action Settlement is Hernandez et al. v. Wells Fargo Bank NA et al., Case No. 3:18-cv-07354, in the U.S. District Court for the Northern District of California.

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