Hundreds of people had their homes foreclosed on after software used by Wells Fargo incorrectly denied them mortgage modifications.
The embattled bank revealed the issue in a regulatory filing this week and said it has set aside $8 million to compensate customers affected by the glitch.
The same filing also disclosed that Wells Fargo (WFC) is facing "formal or informal inquiries or investigations" from unnamed government agencies over how the company purchased federal low-income housing tax credits. The document states the probes are linked to "the financing of low income housing developments," but does not offer further details.
Reuters first reported news of investigations and mishandled mortgage modifications on Friday.
Wells Fargo said the computer error affected "certain accounts" that were undergoing the foreclosure process between April 2010 and October 2015, when the issue was corrected.
About 625 customers were incorrectly denied a loan modification or were not offered one even though they were qualified, according to the filing. In about 400 cases, the customers were ultimately foreclosed upon.
Wells Fargo said in a statement that it was "very sorry that this error occurred" and said it was "providing remediation" to the affected customers.
A spokesperson for the bank "there's not a clear, direct cause and effect relationship between the modification" denials and foreclosures, but confirmed customers who were denied modifications lost their homes.
Related: Wells Fargo to pay $2 billion fine in mortgage settlement
Wells Fargo has been mired in a series of scandals in recent years that have cost the firm billions and left it facing a string of lawsuits and investigations.
Earlier this week, the Justice Department announced Wells Fargo agreed to pay a $2.1 billion fine for issuing mortgage loans it knew contained incorrect income information. The government said the loans contributed to the 2008 financial crisis that crippled the global economy.
In June, Wells Fargo was accused by the federal Securities and Exchange Commission of using complex financial investments to take advantage of mom-and-pop investors. Wells Fargo, which neither admitted nor denied the SEC's allegations, said at the time it "cooperated fully" with the SEC probe.
One of its most far-reaching scandals involved the creation of millions of fake accounts the company created for unsuspecting customers in order to boost its sales figures. The scope of that issue ballooned since the practice was first uncovered in September of 2016.
The bank has also admitted to hitting customers with unfair mortgage fees and charging people for car insurance they didn't need.
— CNN's Julia Horowitz and Matt Egan contributed to this report.
thegauntlet on August 5th, 2018 at 22:49 UTC »
Went through this with them but our circumstances were different. Bought house with a different bank at the end of 2008. Bank was taken over by Wells Fargo as my bank collapsed. In 2013 we wanted to refi our loan, from a 6.25% to a 2 7/8%. Started doing the paperwork with Wells Fargo and then they discovered they couldn't find our original loan docs, title, etc. Another month goes by and bam, we get a foreclosure notice. We were 100% ontime with every payment. Had auto withdrawal. We weren't overly concerned so called up WF and they showed we were making the payments on our new loan, but we had another loan (original for the house). How can that be, we were still in the process of the re-fi. We went down to the branch who had the mortgage guy that originally called us about doing a re-fi in the first place. He was unable to help correct things but said he got someone on it and everything will be cleared up shortly. Sigh of relief...until a week later we get another foreclosure notice with a notice to vacate date. At this point, this is serious so we stop calling Wells Fargo and hire an attorney. Wells Fargo actually showed up in court to fight us on our foreclosure. Their attorney thought he had an opened shut case until our lawyer showed him it was the same property, single loan and they filed the new loan as another loan. We got everything corrected, took our re-fi elsewhere, closed my business account and joint checking accounts, kids college funds, etc with them and sued them for loss of wages and attorney fees. We settled for $10k plus attorney fees and refused to sign a NDA. If we had, we would have gotten more money for us but at the time I just wanted to see them burn. I figured the press would love my story not realizing that this was happening to thousands of other people too. Should have signed the NDA and taken the higher payout.
lbcadden3 on August 5th, 2018 at 22:02 UTC »
I love how nothing is ever actually their fault.
Soyouparty on August 5th, 2018 at 21:57 UTC »
Don't worry, the $50 fine they'll have to pay will teach them not to take advantage of their customers