Wells Fargo acknowledged Friday that hundreds of its customers lost their homes over a roughly five-year period because of an error by the bank.
In yet another apology for the San Francisco-based bank, Wells said a calculation error involving a mortgage underwriting tool resulted in 625 customers being incorrectly denied or not offered modifications to make their loans more affordable. In about 400 of those cases, the homes were ultimately foreclosed on.
The bank, which has a large presence in Charlotte, said the error affected customers in the foreclosure process between April 2010 and October 2015, when the problem was corrected. . .
“We’re very sorry that this error occurred and are providing remediation to the approximately 625 customers who may have been impacted,” spokesman Tom Goyda said in a statement. He said the bank did not have a breakdown of where the customers were from.
In a new disclosure, San Francisco-based Wells said an expanded review found that approximately 870 customers were incorrectly denied or not offered loan modifications or repayment plans that would have made their mortgages more affordable. As a result, about 545 of those customers lost their homes to foreclosure, Wells said in a securities filing.
For the error that caused some 400 foreclosures, Wells Fargo is offering customers $8 million, amounting to around $20,000 per customer, assuming all 400 were foreclosed upon in error. Gordon called the $20,000 “insulting,” noting that the loss in value from a house in the years since 2010 would be worth far more than $20,000 — and the cost to homeowners goes beyond the financial. The Wells Fargo spokesman said the amount is “appropriate remediation regarding the circumstances.”Foreclosure has been linked to an increase in health problems, including mental-health problems in children who had to leave their homes during the housing crisis. People from communities with high foreclosure rates were more likely to visit the hospital, a 2009 study by Princeton University found, for conditions like anxiety, suicide attempts, and heart attacks.“Losing your home is one of the most traumatic things that can happen to a family,” Gordon said. In a situation where a home was foreclosed upon in error, she said the homeowner should be compensated for “pain and suffering” as well.
