Another day, another 'apology' for screwing up from Wells Fargo.
Six months after the Fed Slammed Wells Fargo with unprecedented sanctions - no more total asset growth until it cleans up its act - because of a pattern of consumer abuses and other lapses, that list grew over the weekend when the firm said it may have improperly foreclosed on 400 home loans.
As The Mercury News reports, Wells Fargo says a company mistake contributed to hundreds of foreclosures because it miscalculated customers’ eligibility for mortgage modifications.
The bank said in a filing Friday the error caused about 625 customers to be denied, or not offered, loan modifications they otherwise qualified for. Foreclosures were completed in about 400 of the cases.
The customers had been using federal programs that helped families at risk of losing homes. Spokesman Tom Goyda says there’s no breakdown of where the foreclosures occurred.
The error in the bank’s underwriting tool lasted from 2010 until it was fixed in late 2015, an internal review found.
The American Banker adds that the company accrued $8 million in the second quarter to remediate customers that may have been affected by an automated miscalculation of attorneys' fees between April 13, 2010, and Oct. 20, 2015; and it may pay out more in the future.
"To the extent issues are identified, we will continue to assess any customer harm and provide remediation as appropriate," Wells said in the filing.
Cowen & Co. analyst Jaret Seiberg wrote Monday in a note that “Wells Fargo is not making it easy for the Federal Reserve to lift the asset growth cap," adding that “we don’t know how the Federal Reserve could lift the cap this year. And lifting it next year could become a problem if the Democrats retake the House in November as we expect.”