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Erroneous Credit Reporting Costs Wells $1 Million

Fisher v. Wells Fargo Home Mortgage

September 19, 2007


Wells Fargo Home Mortgage, as a mortgage servicer, has been ordered by a California Superior Court judge to pay more than $1 million for violations of the federal Fair Credit Reporting Act and the California Consumer Credit Reporting Agencies Act.

As a result of the violations, Reed and Mary Ann Fisher, of Oceanside, Calif. suffered from a two-year uncorrected series of false and inaccurate credit reporting that resulted in damaged credit scores and credit denials, according to their suit and a jury decision, said their attorney, Robert F. Brennan, of La Crescenta, Calif.

San Bernardino County Superior Court Judge Martin Hildreth, on Aug. 30 added $293,594 for costs, post trial motions and attorney fees to the $765,000 awarded to the capital by a jury on March 6. This brought the total to $1,055,594.

In a statement, Wells said the verdict "clearly falls outside the guidelines of current law." It filed an appeal to the jury's decision on Aug. 3, two days after their motions for a new trial and for the verdict to be set aside were denied by Judge Hildreth. That appeal is pending.

"The primary issue in dispute is a negative credit report submitted to the credit reporting agencies by the Fishers' previous lender," Wells explained in the statement. "At the time the negative report was filed, Wells Fargo Home Mortgage was servicing the Fisher's loan."

Wells said it quickly took all necessary steps to remove the negative credit information after learning that the Fishers were disputing the negative credit report.

The suit, which was originally filed on Aug. 27, 2003, also included as defendants Trans Union and Loan Star Mortgagee Services, but they were found by the jury to bear no responsibility for the actual damages the plaintiffs suffered under FCRA.

The final, total judgment of more than $1 million is one of only a handful of judgments over $1 million in California for false credit reporting, according to Brennan, who said that number is "probably not enough."

"The credit reporting industry," he maintained, "needs to get the message that false credit reporting can ruin a consumer's life and that extra precautions need to be taken to prevent false credit reporting, and to promptly fix it when it does occur."

The Fishers' home had been found unsafe and uninhabitable in March 2001 because of severe sinkholes and was condemned and slated for demolition. As a result, a forebearance agreement was extended to cover their entire loan, which was then written off by Freddie Mac to whom the loan had been transferred, according to the suit.

But Wells repeatedly reported the Fishers as delinquent on their mortgage starting in May 2001 and then in Oct. 2001 sent the Fishers a notice of default, despite frequent correspondence from the Fishers regarding the forebearance agreement and Wells' own promises to send data forms to the credit bureaus, removing any derogatories.

Even after again being notified of the forebearance agreement by the Fishers in response to the default notice, Wells Fargo "continued to report derogatory references to plaintiffs' credit report," the suit states. Then in Feb.2002, after "negligently and/or intentionally" assigning the loan to Loan Star for a trustee's sale, a notice of foreclosure sale that identified the plaintiffs by name was posted in the local newspaper and as a result they suffered shame, mortification, hurt feelings and loss of their reputation, according to the suit.

While it acknowledged a mistake had been made, the Des Moines, Iowa-based mortgage unit said it gave the Fishers $1,500 in response to their request for compensation, "which the Fishers accepted without objection." The lawsuit wasn't filed until a year later.

The Fishers had always been current on their home mortgage payments, and had otherwise spotless credit, Brennan explained. But Wells' negative credit entries over a two-year period, which were reported despite repeated promises that the credit information was being cleaned up, he said, made it extremely tough for the Fishers to get another living situation and to pick up the pieces of their lives, having been denied their good names and credit by Wells Fargo's false credit reporting.

Jerry DeMuth is an award winning journalist who has been reporting for four decades.

e-mail Jerry at [email protected]
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