Wells Fargo faces new accusations that it tried to capitalize financially on its customers without their permission this time by allegedly modifying mortgage terms for people who had filed for bankruptcy protection. <\/p>\n
With the smoke still lingering from the firestorm that erupted from the bank's opening of fake consumer accounts, Wells was hit with multiple lawsuits alleging that the bank surreptitiously extended loan lengths, potentially costing some homeowners tens of thousands of dollars. <\/p>\n
The bank pulled off a \"virtual hijacking\" with the alleged scam by implementing \"illegal stealth modifications\" in at least 100 cases across the country, plaintiffs attorneys said in court papers filed June 7 in the U.S. Bankruptcy Court for the Western District of North Carolina, where they are hoping to assemble a class-action group. <\/p>\n
Wells Fargospokesman Tom Goyda said the bank \"strongly denies the claims\" because the company clearly identified \"modification offers\" in letters to customers, their attorneys and the respective bankruptcy courts. <\/p>\n
\"In no event would we finalize a modification without receiving signed documents from the customer and, where required, approval from the bankruptcy court,\" Goyda said in an email. <\/p>\n
The latest accusations ensure a fresh round of scrutiny over Wells Fargo's practices, not long after the bank reached a $185 million federal settlement over an acknowledgment that aggressive sales incentives and pressure prompted many branchemployees to open fake accounts to meet their goals. That episode led to the resignation of CEO John Stumpf and the clawback of tens of millions in executive pay. <\/p>\n
RELATED: <\/p>\n
Wells Fargo clawing back $75.3 million more from former execs in fake accounts scandal <\/p>\n
Wells Fargo fined $185M for fake accounts; 5,300 were fired <\/p>\n
Wells Fargo revamps pay plan after fake-accounts scandal <\/p>\n
To be sure, modifications of loan terms, including extending payment over longer periods and lowering monthly amounts, are often helpful to customers who are seeking short-term breathingroom on their finances. But longer loan periods often involve larger payments over time. <\/p>\n
The complaint seeking class-action status was submitted on behalf of North Carolina residents Christopher Dee Cotton and Allison Hedrick Cotton, who filed for Chapter 13 bankruptcy protection in February 2014 with a Wells-serviced mortgage balance of $171,215 at a 20-year interest rate of 4.875%. They remained current on their payments before and during the bankruptcy, according to their lawyers. <\/p>\n
But the bank nonetheless submitted routine documentation through the legal system that resulted in an extension of their original 20-year loan to 40 years, with a reduced interest rate of 3.875% ultimately costing them an extra $84,939 in interest over the life of the mortgage, according to the suit. <\/p>\n
The accusations come fewer than two years after Wells reached a settlement with the U.S. Justice Departmentin which it agreed to pay $81.6 million over an alleged failure to notify customers of payment changes on a timely basis for more than 68,000 homeowners in bankruptcy from December 2011 through March 2015. <\/p>\n
The company agreed as part of that process to overhaul its operations and accept oversight from an independent reviewer. <\/p>\n
It was not immediately clear whether the latest accusations would carry implications forthe Nov. 5, 2015 Justice settlement. <\/p>\n
Contributing: Kevin McCoy <\/p>\n
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey. <\/p>\n
Read or Share this story: https:\/\/usat.ly\/2stWBPJ<\/a> <\/p>\n <\/p>\n Continue reading here: <\/p>\n Lawsuit: Wells Fargo revised mortgages in bankruptcy without permission - USA TODAY<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Wells Fargo faces new accusations that it tried to capitalize financially on its customers without their permission this time by allegedly modifying mortgage terms for people who had filed for bankruptcy protection. With the smoke still lingering from the firestorm that erupted from the bank's opening of fake consumer accounts, Wells was hit with multiple lawsuits alleging that the bank surreptitiously extended loan lengths, potentially costing some homeowners tens of thousands of dollars. Continue reading