Home News Wells Fargo in $94 mln settlement over mortgage forbearance during pandemic

Wells Fargo in $94 mln settlement over mortgage forbearance during pandemic

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The Wells Fargo logo seen on January 10, 2017 in New York City, USA. REUTERS/Stephanie Keith/File Photo

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September 14 (Reuters) – Wells Fargo & Company (WFC.N) reached a $94 million settlement to resolve class action claims in which more than 200,000 mortgage borrowers were seized without their consent during the COVID-19 pandemic.

The settlement was filed last week in federal court in Columbus, Ohio, and is subject to judge approval.

This is a unilateral decision by Wells Fargo to extend leniency to customers who have inquired about a mortgage or expressed distress but did not expressly request it and did not want redress. We will resolve the claim that

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Forgiveness temporarily suspends your mortgage payment obligations.

Customers say Wells Fargo’s decision has hurt credit, made it difficult or expensive to borrow, and prevented them from refinancing at historically low interest rates.

They also said the decision violated the CARES Act, the March 2020 federal economic stimulus package to address COVID-19, which provides leniency upon request by borrowers.

The September 9 settlement covers approximately 212,000 to 213,000 loans provided by San Francisco-based Wells Fargo that were blocked without informed consent between March 1, 2020 and December 31, 2021. It is intended for

Wells Fargo, the fourth-largest US bank, has denied any wrongdoing in agreeing to the settlement. No immediate comment was available on Wednesday.

The first $35 million from the settlement will be prorated, averaging approximately $165 per loan.

Any remaining funds are subject to the claims process or used to pay legal and administrative costs.

Attorneys for Wells Fargo clients may seek up to $23.5 million in attorneys’ fees or 25% of the settlement funds.

Wells Fargo is still reeling from a six-year-old scandal over its sales practices, including unauthorized opening of millions of accounts.

Since 2018, it operates under consent orders from three US financial regulators to strengthen governance and oversight. The Federal Reserve also capped bank assets.

The case is Echard v Wells Fargo Bank NA, United States District Court, Southern District of Ohio, No. 21-05080.

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Reported by Jonathan Stempel, New York.Editing by Jonathan Ortiz

Our criteria: Thomson Reuters Trust Principles.

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