Wells Fargo still hasn't completely put its bad news behind it. The bank has acknowledged that it didn't offer mortgage modifications to hundreds more borrowers who could have qualified for them. Many of those customers eventually lost their homes to foreclosure.
The bank thought it had put the issue to rest in August when it revealed that it miscalculated fees in its formula to determine whether borrowers were eligible for mortgage modifications. At the time, it determined that it wrongly denied modifications to more than 600 mortgage customers and that 400 of them eventually saw their homes go into foreclosure.
In a filing with the Securities and Exchange Commission this week, Wells Fargo admitted that an additional 870 mortgage customers were wrongly denied modifications for the same reason. As a result, it said 545 borrowers eventually lost their homes -- more than the number in the initial revelation.
Wells Fargo said the discrepancy is due to the fact that it initially reviewed homes in the foreclosure process between April 2010 and October 2015. The higher numbers resulted from extending the review period.
Affected consumers to be compensated
The bank has said that it has set aside money to compensate those customers who were wrongly denied mortgage modifications, but it is unclear so far how it will be done.
“Our plan is to work with each customer to arrive at a resolution that addresses their particular situation,” a Wells Fargo spokesman said in a statement to the Los Angeles Times. “Every customer situation is different. As a result, we don’t have any details on the amount we expect to pay out in remediation.”
Wells Fargo's troubles began in late 2016 when it reported that employees had opened millions of checking and credit card accounts for customers without their permission or knowledge. As a result, the CEO took early retirement and 5,000 bank employees were fired. Wells Fargo also paid a large fine.
Since then Wells Fargo has revealed that it sold thousands of insurance policies to auto loan customers who didn't need the coverage. It also reported that it accessed improper fees on some mortgage loans.
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