The Office of the Comptroller of the Currency (OCC) warned Wells Fargo in a scathing letter that it is mulling lodging formal enforcement actions against the bank over its auto insurance and mortgage businesses.
According to news from The Wall Street Journal, citing people familiar with the matter, the OCC said in the letter that Wells Fargo harmed customers in both units. It gave the bank until Nov. 24 to respond.
The regulator contends Wells Fargo failed multiple times to fix the problems with its auto insurance and mortgage lending units, as well as its other business lines. While Wells Fargo wouldn’t comment on the letter, it did tell the Wall Street Journal that there is “still work to be done” and that the bank is “dedicated to making things right, fixing the problems and building a better bank.” Wells Fargo said it is making changes across its line of businesses to rebuild the trust of its customers and employees.
The OCC is currently contemplating a cease and desist order, which will likely include steps the board of the bank has to take to correct the issues. The order typically includes a time period in which the company has to make those changes.
The potential move on the part of the OCC reveals that Wells Fargo is still struggling to rebound from its fake account scandal last year. Since then, the bank has faced claims it charged people for auto loans they didn’t need or want.
In the summer, reports in The New York Times indicated officials in the mortgage lending unit were making unauthorized changes to home loans held by customers in bankruptcy. A class action lawsuit for the alleged victims of the loan modifications contends that consumers were surprised to find out their monthly home loan payments had gone down — which they didn’t mind — and to learn that the terms of their loans had been extended greatly to make those lower payments possible (which they did mind). Decades longer on a loan term mean greater interest payments to the bank.
Those types of major insurance changes for a consumer in bankruptcy are subject to approval by a bankruptcy court judge, but Wells Fargo seems to have decided to skip that step and just put the changes through without alerting any involved party, according to filings in the ongoing class action lawsuit.