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Wednesday, December 31, 2014
Wells Fargo Finally Paying Up
A New York federal jury ordered Wells Fargo & Co. to pay $54.8 million in damages to resolve a class action lawsuit alleging the late fees charged by two mortgage servicers were improper and excessive.
The mortgage fee class action lawsuit alleged that The Money Store and HomEq, mortgage firms which are now defunct, improperly charged late fees after borrowers’ loans were accelerated and paid off. HomEq had been owned by Wachovia, which Wells Fargo acquired in 2008. The Money Store was owned by First Union, which was later acquired by Wachovia. Wells Fargo never actually owned either mortgage firm.
Plaintiff Joseph Mazzei alleged in the mortgage fee class action lawsuit that he took out a mortgage loan from The Money Store in 1994. Five years later, he fell behind on the loan and defaulted several times. He alleges that The Money Store and others accelerated his loan obligations in 2000, declaring that the full amount of the debt was due immediately.
Subsequently, Mazzei was charged multiple late fees for failing to make monthly payments on the loan, according to the mortgage fee class action lawsuit. He later sold his home and made a payment of approximately $61,000 to the defendants.
The mortgage fee class action lawsuit charged the defendants with breach of contract and violations of the Truth in Lending Act and the California Business & Professional Code. A judge previously dismissed claims under the Fair Debt Collection Practices Act and the Real Estate Settlement Procedures Act.
In January 2013, U.S. District Judge John G. Koeltl certified Classes of borrowers who signed on loans owned or serviced by the defendants and were charged unlawful fees between March 1, 2000 and June 2, 2014. Excluded from the Class are borrowers who signed form loan mortgage agreements after Nov. 1, 2006.
The mortgage late fee class action lawsuit, which was filed in 2001, sought around $629 million for alleged overcharges and interest. The case went to trial earlier this month and lasted 10 days.
“We disagree with the jury’s decision to award damages for some of the claims in this case—all of which are based on allegations dating back 10 years or more at a predecessor company—and we likely will seek review of that portion of the verdict,” a spokesman for Wells Fargo said.