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.

Mortgage Fraud Still Happening

If you thought the bad guys had left the mortgage business for greener pastures, think again. The thieves are still out there, ready to separate you from your money. But at the same time, many of us are still not above stretching the truth a little when we are trying to obtain financing.

First, the business bad guys, represented today by Amerisave Mortgage Corp., which the Consumer Financial Protection Bureau has ordered to pay $19.3 million for providing a deceptive bait-and-switch scheme on would-be borrowers.



The CFPB found that the Atlanta-based online company, which lends in all 50 states, lured consumers by advertising misleading interest rates. Then locked them in with costly up-front fees, failed to honor its published rates and illegally overcharged them for affiliated third-party services.

Here's how it worked, according to the CFPB:

Since 2011, the company advertised inaccurate rates and terms in online banner ads and searchable rate tables on third-party websites, inducing consumers to pursue a mortgage with Amerisave. Once at Amerisave's website, consumers received quotes based on an 800 FICO score, even when they had previously entered a score well below 800 on the third-party site that led them to Amerisave in the first place.

The company also required consumers to pay for an appraisal before it would provide a good-faith estimate; then it ordered the appraisal from an affiliated company. Borrowers weren't told that tiny fact until later.

Then, at closing, Amerisave charged its customers for something called "appraisal validation" reports without disclosing that the service was provided by an affiliated company. They also weren't told the fee was marked up by as much as 900%.

In its investigation, the CFPB found that Amerisave and its owner, Patrick Markert, pocketed more than $3 million in indirect profit distributions by overcharging unknowing borrowers. The validation reports cost $20, but Amerisave charged $100, with the $80 windfall finding its way to Markert's wallet.

Citi Group Case Fair or more Fraud??

You may have heard about the Citi Group mortgage fraud and their punishment.  I want to fill you in on the "rest of the story", as Paul Harvey would have said.

Even though this despicable cover up took years to crack, was it a success?  Citi Group got a slap on the hand for their actions. They were ordered to pay a settlement in the amount of $7 billion dollars, which is a large amount of money, but to this group it's a drop in the bucket. This amount, $4.5 billion in cash and an additional $2.5 billion in "consumer relief,"  will help consumers struggling with mortgages and other problems from the 2007-2009 financial crisis.

Also, while the judge held the company responsible, there was absolutely no individual consequences for the individuals  responsible for these actions. Were they simply following orders to keep their employment or were they purposely frauding individuals to make their sales quota?

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