Wells Fargo’s Forbearance Scheme Hurts Massachusetts Homeowners
Unauthorized Forbearance Prevents Refinancing and Increases Loan Payback
Wells Fargo has once again been caught with its hand in the cookie jar. This time in a fake forbearance scheme where it automatically placed borrowers into forbearance who had questions about forbearance and the federal CARES Act. These borrowers, which include homeowners in Massachusetts, never requested to be placed into forbearance.
As a result, homeowners may have suffered one of the following fates:
- Wells Fargo’s forced forbearance damaged their credit worthiness
- They could not refinance because of Wells Fargo placing them in forbearance
- They could not sell their house and buy a new house because they could not obtain financing due to Wells Fargo placing them in forbearance
Given how low interest rates are, homeowners unable to take advantage of those rates could suffer tens of thousands of dollars in losses due to Wells Fargo placing them into forbearance without their permission.
Instead of lowering their payment through refinancing, Wells Fargo’s forced forbearance, if left uncorrected, will result in a higher loan payback as the payments that Wells Fargo would no longer accept will be added onto the back end of their loans with interest.
Wells Fargo’s Long History of Consumer Abuse
Who would think that Wells Fargo would be at it once again with yet another attempt to hurt homeowners after its recent spate of consumer scams? Well, Wells Fargo relishes a good crisis.
Senator Warren’s letter to Wells Fargo’s new CEO sets out a litany of consumer violations committed by Wells Fargo over the years. The letter highlights a series of consumer scams that go way beyond blind neglect or plain incompetence.
- 800,000 people who took out car loans being charged for insurance they did not need
- Repossessing vehicles of service members in violation of federal law
- Charging monthly fees to customer for products they did not understand or need
- Making miscalculation errors on denied loan modifications resulting in 400 wrongful foreclosures
How the Forbearance Scheme Worked
To understand what Wells Fargo did, you have to know a little about the federal CARES Act passed as a result of the Cornavirus pandemic. Under the CARES Act, borrowers with federally backed loans (think Fannie Mae and Freddie Mac), could request a forbearance from their lender. The important word her is “request.” To participate in the forbearance option provided by the CARES Act, homeowners had to affirmatively ask to be placed into the program. Wells Fargo’s forbearance program also required an affirmative request from the borrower to be placed into its program.
The problem is that Wells Fargo automatically placed borrowers into forbearance when they contacted Well Fargo about their mortgage options. This included Massachusetts homeowners.
How Wells Fargo’s Unwanted Forbearance Can Cost a Homeowner Big Money
When Wells Fargo wrongfully placed homeowners into forbearance, it also stopped accepting and crediting their loan payments. Borrowers who were not behind on their mortgage payments, and who were contacting Wells Fargo merely to request information, now could not make loan payments.
To add insult to injury, Wells Fargo reported the forbearance to the credit bureaus. Many homeowners applying for a loan to refinance their mortgage to a lower rate were denied a refinancing. A borrower seeking to refinance their existing mortgage may have lost tens of thousands of dollars over the life of a 30 year fixed mortgage by missing out on a great refinancing rate.
Borrowers who were trying to sell their home and get into a new home, may not qualify for a mortgage for their new home due to the forbearance noted on their credit report.
What Rights Do You Have Against Well Fargo in Massachusetts?
The good news is that Massachusetts homeowners are well protected. Massachusetts has some of the best consumer protection laws in the country. Given Wells Fargo’s track record, we don’t anticipate that they will voluntary correct the problem they created. That has not been the way they’ve operated in the past.
Contact Our Office to Discuss Your Wells Fargo Forbearance Problems
We are once again representing homeowners against banks and servicers, as we did in the Great Mortgage Meltdown of 2009. We work hard to help out every homeowner who calls. The cases we take against banks are on a contingency basis as individual cases or class actions.
We know that homeowners in an economy ravaged by a pandemic don’t have the funds to pay for help from a lawyer. That is why we take the cases on a contingency basis.
We are seeking to represent Massachusetts homeowners who:
- Wells Fargo placed into forbearance without their consent
- Who could not refinance because of Wells Fargo placing them in forbearance
- Who could not sell their house and buy a new house because they could not obtain financing due to Wells Fargo placing them in forbearance
If you have been having problems with Wells Fargo or any other lender or servicer, please call our office at 508-998-0800 or simply fill out our confidential contact form. You will get a call back or return e-mail within 24 hours. There are no up-front fees or costs.