The Department of Justice’s U.S. Trustee Program reached a national settlement with Wells Fargo over mortgage servicing complaints. Announced yesterday, Wells Fargo will pay $81.6 million for its repeated failure to provide homeowners in bankruptcy with required payment change notices. Even though Bankruptcy Rules require mortgage creditors to file and serve a notice before adjusting a Chapter 13 debtor’s monthly mortgage payment, Wells Fargo admits it failed to do so, impacting nearly 68,000 mortgage accounts. Details of the settlement are available at http://www.justice.gov/opa/pr/us-trustee-program-reaches-816-million-settlement-wells-fargo-bank-na-protect-homeowners.
Homeowners will receive credits on their mortgage accounts, depending upon the mortgage balance, with an average result of $1,254 per homeowner.
Director Cliff White of the U.S. Trustee Program stated:
I am pleased that Wells Fargo has acted responsibly by accepting accountability for its deficient bankruptcy practices, agreed to compensate affected homeowners for those deficiencies and committed to making necessary improvements in its bankruptcy operations…When creditors fail to comply with the bankruptcy laws and rules, they compromise the integrity of the bankruptcy system and must be held accountable. Transparency in the process is of paramount importance. Homeowners in bankruptcy have the right to proper and timely notices, particularly when they are being asked to pay more. The U.S. Trustee Program remains diligent in its effort to hold financial institutions that disregard the law accountable for their actions.