A series of new legal allegations have been bought against the bank, once again regarding its improper handling of customer accounts. This time, light has been shed on the company’s mortgage business, in which unauthorized changes were made to the loan terms on the mortgages of customers in bankruptcy.
Wells Fargo, a major American Bank headquartered in San Francisco, has been plagued by scandals and bad publicity in the past year. On September 8 of 2016, it was forced to pay $185 million in fines for its activities in opening more than 1.5 million bank accounts without its customers’ consent. The company’s culture demands its managers and employees to reach incredibly high quotas and targets, and directives stems from the very highest levels of management. CEO John Stumpf encouraged employees to create as many accounts from each customer as they possibly can, his infamously motto being “eight is great”.
Clearly, the bank still hasn’t learned from its past mistakes. New class action lawsuits filed by multiple owners representing plaintiffs across the country reveal that the bank has altered mortgage repayment contracts of multiple customers who have filed for bankruptcy. The changes appear to be benign, lowering each customer’s monthly loan payments. However, the catch is that it also extends the duration of the loans by up to 40 years, resulting in customers owing the bank more than twice as much as before in the long term.
Many customers file for chapter 13 bankruptcy when they have fallen into mortgage arrears in the United States. This allows someone to keep their home as they continue to pay off their mortgage arrears though a repayment plan.
In cases as such, as long the homeowner keeps up with their mortgage by paying the lender directly or paying the court appointed trustee, they are able to avoid foreclosure. However, according to allegations filed by lawyers for the Cottons in North Carolina and for the Perezes in Texas, Wells Fargo has altered the mortgage loans without authorization by the plaintiffs or by the court. Five other cases are also currently being presented across the nation, showing evidence that such secretive actions have been undertaken by the bank since 2015.
The unauthorized changes made by Wells Fargo not only dramatically increases repayment on loans, it puts bankrupt customers in further risk by making them vulnerable to foreclosure due to discrepancies between the value of repayments customers listed to bankruptcy court and the actual value of the newly altered payments.
As a financial institution with a major impact on the United States’ economy, Wells Fargo’s recent scandals not only diminishes its credibility in the eyes of customers, it also reveals a deeply rooted culture of corruption and exploitation in the country’s banking and financial sectors as a whole.