By David Koen
In the past decade, Wells Fargo Bank, N.A., has repeatedly shocked and awed consumers and regulators with a variety of unlawful practices. Revelations of the bank’s misdeeds – admitted and alleged – continue.
In a regulatory filing on August 3, 2018, Wells Fargo disclosed that a software mistake miscalculated eligibility for home loan modifications, causing about 625 homeowners to be denied relief. Approximately 400 of such customers then lost their homes to foreclosure. The errors occurred between April 2010 and October 2015.
Wells Fargo has created an $8 million compensation fund for affected homeowners. That’s an average of $12,800 for each such homeowner.
The bank also allowed that “[t]his effort to identify other instances in which customers may have experienced harm is ongoing, and it is possible that we may identify other areas of potential concern.”
Wells Fargo’s announcement that more of its customers may been harmed follows a similar statement the bank made after a previous scandal in which it was embroiled. In 2016, the bank’s own analysis initially revealed that it had created more than 2 million accounts that may not have been authorized by consumers. A year later, Wells Fargo revealed that it had created up to 1.4 million more potentially fake accounts.
Responding to the mortgage modification mishap, U.S. Senator Elizabeth Warren of Massachusetts tweeted, “Because of an error @WellsFargo made, 400 of its customers lost their homes. What’s the bank doing to make it right? Setting aside a few thousand dollars for each of the people affected. Pathetic. The execs who oversaw this – including CEO Tim Sloan – should be fired.”
Wells Fargo spokesman Tom Goyda said that “customers are receiving what Wells believes is appropriate given the circumstances.”
Banking while Black
Two black Florida residents have sued Wells Fargo for racial discrimination in recent months following incidents in which the bank allegedly either threatened to or did call the police on its customers.
In one incident, 78-year-old Barbara Carroll alleged she tried to cash a check for $140 at a Wells Fargo branch. Bank employees then refused to cash her check or return her driver’s license, asked what she did for the money and told her they had called police. Carroll said the employees suspected that Carroll was guilty of forgery, even after the man who wrote the check confirmed its legitimacy. On July 18, Carroll sued Wells Fargo in the U.S. District Court for the Southern District of Florida, Case No. 0:18-cv-61646.
The other suit was brought by Jean Romane Elie. Elie has alleged that after trying to withdraw money for rent, a teller called the Palm Beach County Sheriff’s Office. According to Elie, he was handcuffed, detained, and accused of committing a felony. The case is pending in Palm Beach County, Florida, Circuit Court.
A Wells Fargo spokeswoman told The Washington Post that the bank “opposes discrimination of any kind.”
The cities of Sacramento, Philadelphia, Baltimore, Miami and Memphis have also sued Wells Fargo for racial discrimination. In 2012, Wells Fargo entered into a $175 million settlement with the U.S. Department of Justice after Baltimore alleged the bank had steered minorities into subprime loans and gave them less favorable rates than white borrowers. The bank has also settled Memphis’ suit against it.