Federal regulators claim banks have improperly denied thousands of mortgage modifications over at least seven years, in some cases causing customers to lose their homes.
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Wells Fargo is committing $3.7 billion to resolve allegations by federal regulators that it has harmed millions of consumers over the years through widespread mismanagement of mortgages, auto loans and savings accounts. agreed to pay
of settlement In an agreement with the Consumer Financial Protection Bureau (CFPB) announced Tuesday, Wells Fargo has awarded more than $2 billion in consumer compensation and 17 million dollars for alleged violations of the law in some of the company’s largest product lines. Billion dollars in civil penalties must be paid.
“Wells Fargo is a repeat offender and has been subject to multiple enforcement actions by the CFPB and other regulators, including defective student loan services, mortgage kickbacks, fake accounts, harmful including violations across business units, such as unfair auto financing practices.” Press release.
For at least seven years, the CFPB alleged that Wells Fargo improperly declined thousands of mortgage modifications, in some cases leading to customers losing their homes.
“Banks have been aware of the problem for years before finally addressing it,” the CFPB said.
Wells Fargo last year agreed to pay another federal regulator, the Office of the Comptroller of the Currency, a $250 million fine.
Wells Fargo Chief Executive Officer Charlie Scharf has acknowledged the “unacceptable practices” the company has sought to reverse.
Charles Scharf
“We have come a long way in the last three years and today we are a different company,” said Scharf. statement“We remain committed to doing the right thing for our customers and working closely with regulators and others to appropriately address any issues that arise.”
Wells Fargo announced a $3.5 billion tier award on January 13 after taking into account “the CFPB’s civil penalties and related client remediation costs, unresolved litigation matters and other amounts related to customer remediation.” It said it plans to report a fourth quarter of an operating loss.
The settlement requires Wells Fargo to pay:
- Approximately $200 million in consumer relief for impacted mortgage customers
- Over $1.3 Billion in Consumer Relief for Affected Auto Loan Accounts
- Over $500 million in consumer relief for affected deposit accounts, including $205 million in unexpected overdraft fees.
In connection with the settlement, the CFPB will terminate the 2016 Consent Order governing the collection of Wells Fargo’s student loan payments.
Wells Fargo said the CFPB had also provided “clarity and a path” towards ending the deal. 2018 Consent Order Identified unfair practices in mortgage interest rate locking and mandatorily insured auto loans.
Wells Fargo, once the largest mortgage provider in the U.S., is seeing its market share dwindle as rising interest rates and a shrinking branch network shrink banks’ mortgage business.
Bloomberg reported in August that Wells Fargo was eyeing a “significant exit” from mortgages. This includes scaling back or closing correspondent lending channels, with executives reportedly concerned about the financial and reputational risks of buying mortgages from third parties. I’m here.
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