Wells Fargo Agrees to Pay $50M to Settle Mortgage Lawsuit
On Oct 28, 2016, Wells Fargo & Company WFC agreed to pay $50 million for settling a lawsuit filed in 2012 by thousands of homeowners, who were charged extra appraisal fees by the bank after they defaulted on their mortgage loans.
Per the National Association of BPO Professionals, banks generally charge $50 or less in the form of appraisal fees from borrowers who default on their mortgage loans. But, according to the lawsuit, Wells Fargo was charging appraisal fees of about $95 to $125.
This increased the borrowers’ loans by hundreds and thousands and thus added to their burdens, making them default further. It was, however, difficult for the victims to identify the fraud because the fee was mentioned as “other charges” in the statements.
The settlement, which was disclosed in a filing in an Oakland, CA federal court still requires approval by the court and covers almost 250,000 homeowners.
"We’re very pleased to have negotiated a settlement that achieves our litigation goals," the plaintiffs' lawyer Roland Tellis said.
Wells Fargo’s senior Vice President Tom Goyda said, “While we believe our practices related to Broker Price Opinions were proper and disagree with the claims in the lawsuit, we have agreed to settle the matter to avoid further litigation.”
The company is still struggling with various pending lawsuits relating to the fraudulent practices of its employees, who opened up fake customer accounts to meet aggressive sales goals.
If the $50 million settlement is approved, it will finally put to rest all the worldwide claims against the banking giant that it charges its borrowers much more than it pays for third-party appraisals.
Currently, Wells Fargo carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the finance space include Farmers Capital Bank Corporation FFKT, Bank of America Corporation BAC and Comerica Incorporated CMA.
Farmers Capital has witnessed an upward earnings estimate revision of 8.3% over the past 30 days. Moreover, its share price is up 10.5% in the past six months. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bank of America currently carries a Zacks Rank #2 (Buy). It has witnessed an upward earnings estimate revision of nearly 12.6% over the past 30 days. Its share price is up 11.7% in the six months period.
Comerica also carries a Zacks Rank #2 and witnessed an upward earnings estimate revision of 9.2% over the past 30 days. Also, its share price has gained 17.5% in the past six months.
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