It has been a difficult year for Wells Fargo, the undisputed king of mortgages.
While they continue to lead the nation in the volume of origination of mortgage loans, they seem to be receiving success from all angles thanks to some alleged unscrupulous behavior.
Their mortgage business seemed to survive the scandal of the relatively false big account, but now they are dealing with another potential shame related to mortgages.
I guess it was just a matter of time.
Did Wells Fargo cause customers to pay blocking extension fees unfairly?
A new lawsuit filed by a Nevada borrower named Victor Muniz states that Wells Fargo charged him an extension fee for the blocking fee after his loan was delayed due to the bank's own problems.
In other words, it was not his fault that the bank did not close the loan before the lock expired, but they still charged him an extension fee of $ 287.50.
Apparently, an employee told Muniz that the bank would cover the charge, only to have that decision reversed by a regional manager.
That may have turned out to be a big mistake because the Consumer Financial Protection Office (CFPB) is now investigating bank lending practices.
It is common for locks to be depleted if a mortgage is stuck in documentation delays, or an evaluation problem arises. That's why borrowers can float a bit and lock up later when they know they are in the homestretch.
Other borrowers can block almost immediately for fear of losing that super low mortgage rate. Unfortunately, even a 90 day blockade might not be enough if the mortgage is delayed enough.
[View the latest mortgage rates from dozens of lenders, updated daily.]
Normally, you will have to extend your block for X days if your loan does not close on the due date of the block. Who pays for that extension is always a frontage point.
Sometimes, the bank will extend the lock as a courtesy to the borrower, even if it is not explicitly the fault of the bank. Other times the bank will ask the borrower to pay an extension fee, which can be quite expensive depending on the size of the loan amount.Wells Fargo apparently blamed borrowers for their own delays This is where Wells Fargo may have gotten into trouble. Bank managers allegedly lobbied their loan officers to blame homeowners for any delays that resulted in a foreclosure rate, even if it was not the borrower's fault. It appeared to be a systematic problem, whereby employees falsely claimed that documents were missing, even if the borrower satisfied all the requests and conditions of processing. The delays may have actually been the result of the lack of staff, but the bank allegedly did not own that. The bank is now reviewing its previous rate block extensions to determine what measures, if any, will be taken for clients, according to a statement by Wells Fargo spokesman Tom Goyda. On the one hand, it seems a rather trivial thing for the bank to participate, especially a massive bank like Wells Fargo that can probably absorb small fees. Of course, a rate lock extension fee here and a few thousands beyond, and we are talking about a lot of money. The big question is guilt. The lock thing has always been a bit of a gray area because the many parts are involved. You can blame the realtor, the seller, the buyer, the bank, the appraiser, and so on. And as mentioned, banks often just extend the locks as a courtesy, as they usually have some wigging space. At least if it is only for a few days. It can be difficult to prove guilt, but if Wells Fargo's own employees testify, it could be a big scandal and another blow for the big bank. The lawsuit is seeking class action status. However, Wells Fargo was the top mortgage lender in 2016, doubling the lending volume of its closest competitor (Chase). And it does not look like they're going to lose their # 1 rank anytime soon.
