Wells Fargo Settlement with Department of Justice Announced for Bankrupt Homeowners Who Did Not Receive Change of Payment Notices

On Thursday, the Department of Justice released a settlement with Wells Fargo concerning Wells Fargo’s failure to send payment change notices and updated escrow statements to homeowners in bankruptcy:

Settlement Terms

Wells Fargo agrees to pay a total of $81.6 million to homeowners who were in bankruptcy between Dec. 1, 2011, and March 31, 2015, and who were affected by Wells Fargo’s failure to timely file PCNs and escrow statements, including:

  • $53.6 million will be paid to more than 42,000 homeowners whose payments increased as to which Wells Fargo failed to timely file a PCN with the court. The payment will be in the form of a credit to the homeowner’s mortgage account in a lump sum amount, which averages $1,254 per homeowner and varies depending on the homeowner’s mortgage balance. More than 70 percent of the total payments will go to homeowners who have mortgage balances under $300,000. These payments will be made regardless of whether homeowners actually paid the increased amount.
  • An estimated $10 million will be paid by crediting homeowners’ accounts at the end of their bankruptcy cases if, upon a detailed review of the accounts, it is determined the homeowners were not fully compensated through the initial crediting process described above. Wells Fargo estimates that 15 to 20 percent of homeowners who receive the initial payments will be due additional amounts at case closing.
  • $1.5 million will be refunded in cash to about 3,000 homeowners where notices of decreases in monthly payments were not timely provided and the homeowners paid more than the actual amount due.
  • $1 million will be refunded in cash to about 2,400 homeowners who satisfied escrow shortages by making a lump sum payment, but whose monthly payments did not decrease to account for the lump sum payment.
  • $4.5 million will be paid by crediting the mortgage escrow accounts of about 6,000 homeowners who did not receive timely escrow statements. Wells Fargo will credit the amount of any increase in escrow shortage that was incurred between the time Wells Fargo should have performed the analysis and the time it actually did perform the analysis. As a result, homeowners will not be responsible for any increase in the escrow shortage stemming from Wells Fargo’s failure to timely perform the escrow analysis.
  • $4 million will be paid to about 12,000 homeowners by crediting mortgage accounts in the amount of $333, where Wells Fargo failed to timely perform an escrow analysis that would have resulted in a PCN being filed and the homeowner is not already receiving remediation for a missed or untimely PCN.
  • $4 million will be refunded in cash to about 6,000 homeowners who did not receive timely escrow statements and whose escrow accounts contained surpluses that Wells Fargo had not refunded or credited toward the next year’s escrow payment.
  • $3 million in remediation to about 8,000 homeowners has already been completed by Wells Fargo for certain violations.
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2 thoughts on “Wells Fargo Settlement with Department of Justice Announced for Bankrupt Homeowners Who Did Not Receive Change of Payment Notices

  1. I got a notice on Nov. 6, 2015 from Wells Fargo of a $706 escrow adjustment to be added in, and it was added. But now questioning how I had $2972.82 YTD, they paid my Insurance of $786.00 and taxes ($495.59 + $511.81) total of $1007.40. Now I only have an escrow balance of $447.25.
    My escrow YTD in 2014 was $4681.53, I had about same pricing on taxes & Insurance (less than $2000 combined) … yet I started 2015 with a negative $-79.84 …. What calculator are they using? Go figure! I’m tired of being pencil whipped on the back end by Wells Fargo.

    Like

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