Wells Fargo Admits Hundreds Of Customers Wrongly Lost Their Homes To Foreclosure Due To Computer Glitch
According to CNN Money, hundreds of people had their homes foreclosed after Wells Fargo bank incorrectly denied them mortgage modifications due to glitches in new software.
The glitch was discovered during a regulatory filing this week and the bank has responded by setting aside $8 million to compensate those affected. Wells Fargo also reported that the accounts affected were ones undergoing the foreclosure process between April 2010 and October 2015.
Around 625 people were not offered a loan or denied a loan modification despite being qualified while another 400 people were foreclosed upon.
A spokesperson for the bank apologized for the error and added, “there’s not a clear, direct cause and effect relationship between the modification” denials and foreclosures, according to CNNMoney.
This issue is just the latest blow to the embattled bank, who has faced a number of private lawsuits, regulatory penalties, and remediation expenses.
The regulatory filing that revealed the mortgage glitch also disclosed that government agencies were investigating Wells Fargo’s use of low-income housing tax credits. The unnamed tax inquiries are linked to “the financing of low income housing developments” and how the bank negotiated the purchase of the credits, but further information was not divulged.
Wells Fargo was also caught in another scandal earlier this week when the Justice Department announced that the bank had agreed to pay a $2.1 billion fine for approving mortgage loans that knowingly contained incorrect information. These loans were tied to the financial crisis that took place in 2008.
In June, the federal Securities and Exchange Commission accused Wells Fargo of “improperly encouraging” brokerage clients to trade high-fee debt products that were meant to be held until maturity. The bank then directed their clients to invest in new products.
The SEC accused Wells Fargo of “misconduct,” adding that financial advisors “did not reasonably investigate or understand the significant costs of the recommendations.”
However, the biggest scandal involved the creation of millions of fake accounts with the intention of boosting sales figures. From 2011 to mid-2016, employees created 1.5 million unauthorized deposit accounts and sent out more than 500,000 unauthorized credit card applications, costing the bank $2.6 million in fees.
The bank has also admitted to forcing auto borrowers to pay for car insurance they did not need and slapping homebuyers with unfair mortgage fees.
In February, Wells Fargo received unprecedented sanctions from the Federal Reserve for “widespread customer abuses,” preventing them from growing beyond $1 trillion in assets until they turn their behavior around. The penalties are expected to stay in place until next year.
