Wells Fargo said to be accused of making improper mortgage changes


Wells Fargo (NYSE:WFC), still recovering from a consumer accounts scandal last year, is now accused in a class-action lawsuit of executing unauthorized changes to home loans held by consumers in bankruptcy since 2015, the New York Times reported.

Typically, those loan changes would need to be approved by a court and other parties involved – but the paper reported that according to the lawsuit, that process didn’t happen.

Changes to the loans lowered customers’ monthly payments, but buried in the details was another change: As the monthly payments declined, the loan durations would be lengthened by decades, meaning over the long term, customers would end up forking over more money than originally agreed, the Times said.

It’s not clear how many times the bank made those supposed unsolicited loan changes, the Times found seven cases in several states across the country in addition to records produced by Wells Fargo that showed it submitted changes on at least 25 loans since 2015.

For its part, Wells Fargo denied claims in the lawsuit, according to the Times, and said borrowers and bankruptcy courts were notified of any changes to loans.

Last fall, Wells Fargo was fined $185 million and then-CEO John Stumpf resigned after the company admitted to opening bank and credit card accounts for customers without their permission to meet sales quotas.