A Nevada homeowner has filed a lawsuit accusing Wells Fargo & Co of improperly forcing thousands of U.S. customers to lock in home interest rates when their mortgage applications were delayed.
Reuters reported news that Victor Muniz alleges that he was charged $287.50 for a rate lock extension this year after his mortgage application was hit with bank delays. While the homeowner was initially told that Wells Fargo would pay to extend the home interest rate lock, a regional manager reversed that decision, according to court documents.
The Wells Fargo class action lawsuit, filed this week in San Francisco federal court, accuses the bank of violating state and federal consumer protection laws, including the U.S. Real Estate Settlement Procedures Act and the U.S. Truth in Lending Act.
The complaint goes on to say that Wells Fargo managers pressured employees to blame homeowners for the delays, such as falsely stating that paperwork was missing, so homeowners could be stuck with extra fees. While the bank usually locked in home interest rates for 30 to 90 days, it often took longer than that to process applications due to understaffing. Fees would then amount to between 0.125 percent to 0.25 percent of the loan amount, the suit said.
Wells Fargo spokesman Tom Goyda said the bank is reviewing past practices on rate lock extensions and will take appropriate steps for affected customers. Earlier this month, the company revealed that the Consumer Financial Protection Bureau was investigating the fees Wells Fargo charged customers to lock in interest rates for delayed mortgage loans, and that the bank was working with regulators to see if customers had been harmed by the fees.
The Wells Fargo lawsuit, which will request the court grant class action status, comes as the bank is trying to recover from last year’s scandal, when it was discovered that employees had opened a slew of fake accounts in the retail banking units. A recent update from CEO Tim Sloan revealed that the company will announce the completion of the expanded retail account analysis for 2009 through 2016 within the next few weeks — and Wells Fargo expects the totals for accounts and dollars remediated to grow.