For many, the American dream is still about owning your own home. So imagine your financial situation, never as healthy as it was before the 2008 financial crisis, growing worse, you fall behind in your mortgage payments and contact your bank for help.
In fact, you reach out to them to negotiate a mortgage loan modification under a federal assistance program and are denied. The bank, Wells Fargo to be exact, acknowledges that two federal government programs require Wells Fargo and other lenders to offer loan modifications to keep people in their homes when they are in default, rather than going through the expensive process of foreclosure. However, Wells Fargo admits they did not comply with this law due to a software glitch that affected 874 mortgages that were in default.
You lose your home, along with 544 other customers who were foreclosed on as a result of this glitch.
Oh, but the bank has apologized. OOPs we made a mistake and are so sorry to have inconvenienced you. As Tom Goyda, a spokesman for Wells Fargo, said in an email, “We’re very sorry that the errors occurred and have assigned a single, dedicated point of contact to ensure that each customer is engaged with and assisted individually.”
The bank said it has contacted the majority of the affected customers to provide remediation and offer no-cost, independent mediation. They’ve also set aside $8 million to compensate customers when the error was originally discovered in August. Do the math.
Those impacted are being offered a check in the range of $10,000 as a gesture of goodwill. If the person isn’t satisfied with the amount, Wells Fargo generally offers to submit to independent mediation to determine if the person should get more money.
A gesture of goodwill towards someone who has lost their home and yet did their best to negotiate new terms! Many of these individuals lost a substantial amount of equity, not to mention a poor credit rating, significant upheaval, pain and distress!
And their advice is going to mediation! Have they forgotten that just last year the OCC sent them (Wells Fargo) letters saying the bank had willingly harassed its customers and repeatedly failed to correct its problems? The bank has been operating under an asset cap ordered by the Federal Reserve while it cleans up its governance practices. Guess they have far to go.
Just this last October their CEO Timothy Sloan said “In the last two years, we have become more customer-focused, made significant leadership and board changes, strengthened risk management and controls, simplified the organization and team members.”
Mr. Sloan, were you unaware that your bank did not comply with the law, supposedly due to a software glitch??
Senator Elizabeth Warren has this to say about Wells Fargo’s “remediation” plan, “Setting aside a few thousand dollars for each of the people affected. Pathetic.”
Senator Schatz, who sits on the Senate Banking Committee, adds,”Wells Fargo’s remediation plan does not offer near enough to compensate for the “devastating ripple effect” a foreclosure can have, including the “stress and trauma” of losing one’s home, “related health problems,” and “destroying people’s credit.”
I’m speechless over this. A bank once known for its community service and customer care, a respected pillar of the community continues its blatant negligence and compounds it with egregious unethical behavior. Apologies and the right remuneration to go along with that apology to everyone harmed are very much in order.
Do the right thing Wells Fargo.
Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.
