Amid multiple lawsuits over allegedly illegally charging home loan applicants rate-lock extension fees, Wells Fargo & Co. will refund as much as nearly $100 million.
The issue first came to light
in January when ProPublica reported on the alleged improper fees based on statements it reportedly obtained from four former employees.
Then, in July, former
employee Mauricio Alaniz filed a lawsuit alleging that even though inadequate production staffing led to closing delays, borrowers were charged extension fees.
The following week, a class action was filed on behalf of consumers
over the rate-lock extension fees.
On Wednesday, the San Francisco-based bank-holding company announced plans to issue refunds to consumers who paid fees for mortgage rate lock extensions but shouldn’t have.
The fees at issue were requested by Wells Fargo from September 2013 — when it implemented the rate-lock extension policy — through Feb. 28, 2017. During that period, there were around $98 million in extension fees assessed to approximately 110,000 borrowers — though “the company believes a substantial number of those fees were appropriately charged.”
According to today’s statement, that policy was “at times, not consistently applied, resulting in some borrowers being charged fees in cases where the company was primarily responsible for the delays that made the extensions necessary.”
Wells Fargo said it previously disclosed a review of past rate-lock extension policies and procedures and noted that its chief executive officer, Tim Sloan, mentioned the planned refunds during his appearance Tuesday before the U.S. Senate Committee on Banking, Housing and Urban Affairs.
During that contentious hearing, Sen. Elizabeth Warren (D-Massachusetts) called for Sloan’s ouster.
Wells Fargo said it changed the
rate-lock extension process in March 2017 o ensure more consistency. This included the establishment of a centralized team to review all extension requests for consistent application of the policy.
The first notices are expected to be sent to impacted customers in the fourth quarter.
Wells Fargo anticipates that the total amount to be refunded will be less than the $98 million collected during the period in question since
not all of the fees assessed were actually paid and some fees have been already refunded.
