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Wells Fargo Settles Mortgage Investigations in Eight States for $25 Million

Wells Fargo Settles Mortgage Investigations in Eight States for $25 Million

Just as calls for a nation-wide foreclosure moratorium peak, and on the heels of what looks to be certain Congressional investigation into the practices of “robo-signers” to aid in those foreclosures, Wells Fargo announced that it was paying nearly $25 million to settle investigations brought by eight states attorney generals concerning the practices of one of their subsidiaries.

The allegations involve California based Wachovia Corp, a group Wells Fargo purchased in 2008.  According to investigations in Arizona, Colorado, Florida, Illinois, Nevada, New Jersey, Texas and Washington, Wachovia was in the practice of making risky loans to homeowners without disclosing all those risks.  The loans involved were know as option adjustable rate loans, or “pick a payment” mortgages.  Investigators charge the loans were deceptive to borrowers because they allowed borrowers to defer some of their interest payments and add them to the principal balance which means that borrowers could actually make payments on the loan yet their debt on that loan would increase every month despite making those payments.

While Wells Fargo insists that the practice at Wachovia ceased by the time it purchased the company, and as part of the settlement has refused to admit to any wrongdoing, it’s easy to see how such a product could be toxic to any consumer, but especially to an unsophisticated one.

In exchange for dropping the investigations, Wells has agreed to offer loan assistance worth more than $770 million to more than 8.700 borrowers through June 2013.  The almost $25 million paid to states will be used to help those states reach out to customers who took out such loans.  Borrowers who have already received a loan modification from Wells Fargo will not be eligible for the new program.

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photo courtesy of Tracy O via Flickr

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33 comments

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8:55PM PST on Nov 17, 2011

Why can't I post this article to Facebook?

2:25AM PST on Nov 16, 2011

Thanks.

5:48AM PDT on Oct 14, 2010

Wells Fargo bought out my saving and loan a few months after I moved abroad. While my bank was fine with adapting to my new situation, Wells Fargo couldn't deal with it at all, to the point of customer service people not being able to find me on the map and sending me information for eight other countries, but never for where I was. I am so glad I finally got out!

11:44PM PDT on Oct 13, 2010

Banksters: criminals too big to prosecute who are allowed to 'pay a corporate financial penalty' to have all cases dropped... America is rooted! While blacks and hispanics get 5 years and never to vote again on minor drugs charges real criminals hide behind the cloak of national security and banksters get bail outs to pay for their get out of jail free cards.
Truth and justice... santa clause and the easter bunny...
The Land of the Lie more like it!

1:29PM PDT on Oct 13, 2010

I used to work for Wells Fargo. I told them during my interview I am not a sales person. In training they tell you they are customer oriented with their 11 ways to wow customer service goals but training turned out to be about two days of fraud prevention, emergency proceedures, some basics on the software. 5 or 6 days on "Customer Service" which was "finding ways to enhance the customer's experience and service" and really all they did was to teach us about all the products we needed to sell. And I do mean sell because we had sales goals every quarter, each morning we were asked to make a sales comitment and at the end of the day what we had actually sold and what we were going to try the next day to meet our goals. this was in a town of about 9,000 with 3 banks and 2 credit unions. Sales are the focus at Wells Fargo, and probably the most stressful year of my life.

2:09PM PDT on Oct 12, 2010

i have always banked with our local credit union, but went through Wells Fargo for our latest mortgage about 8 years ago before all the trouble started. I adore the loan representative, but since the bail out I have received a harrassing call on the first of every single month for the mortgage due, I have tried to see if I can refinance through my credit union, but they are unable to help out with this. I definitely understand why so many people are just walking away from their homes, sometimes there are just "no win" situations that are out of our controls. How have we come to this point where banks, Wall street, money in general has absolute control over our very existance? I have made a decision to sell my home and just rent due to the fact that I will never own, I will always be in debt to the bank and that is something I do not want to do any longer.

12:22PM PDT on Oct 12, 2010

Foreclosure Stoppage Trouble for Property Market! Plus Obama admin does not support a moratorium on Foreclosures...

http://www.officialforeclosurehelp.com/

Who is representing the working man????

11:03PM PDT on Oct 11, 2010

Goes to show how much money there is to be made
in these Ponsi Schemes the Financials play .
25 million is pocket change ; There laughing all the way
to the Bank -- pun intended . B

6:59PM PDT on Oct 11, 2010

There is no excuse to not try to work out a mortgage modification plan for most people- the banks are making PURE PROFIT on the first decade or so of the mortgage anyway.

3:30PM PDT on Oct 11, 2010

What can one say?

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