Wells Fargo’s scandals continue to pile up. Most recently, the San Francisco-based institution says that a computer glitch led to more than 600 of its customers losing their homes.
The problems stemmed from loan modification applications that the bank directed homeowners to online, the bank revealed in an August 3 filing with the Securities & Exchange Commission.
Wells Fargo: 600+ customers lost homes due to computer glitch
The issue, which stemmed from an error in Wells Fargo’s underwriting tool, affected people who were in the foreclosure process from April 2010 to October 2015, the bank said.
The bank said more than two-thirds of the customers caught in the computer error ended up losing their homes in foreclosure.
“As a result of this error, approximately 625 customers were incorrectly denied a loan modification or were not offered a modification in cases where they would have otherwise qualified,” Wells Fargo said in the filing. “In approximately 400 of these instances, after the loan modification was denied or the customer was deemed ineligible to be offered a loan modification, a foreclosure was completed.”
Wells Fargo said that it has set aside $8 million to “remediate” customers who were affected by the error.
Here are Wells Fargo’s scandals in 2018
The loan modification glitch is just the latest controversy the bank has dealt with as of late. Here are more Wells Fargo scandals from 2018:
1. Wells Fargo must pay $2 billion for decade-old mortgage practices
Residential loan scandal: In the August 1 announcement, the Justice Department said that it was fining Wells Fargo $2 billion based on the bank’s “alleged origination and sale of residential mortgage loans that it knew contained misstated income information and did not meet the quality that Wells Fargo represented.”
Because of the alleged deception, investors and other financial institutions, lost billions of dollars from investing in mortgage-backed securities during the economic downturn in 2007-2009, the feds said.
The Department of Justice said that Wells Fargo knew that a huge portion of its residential loans contained misstated income, but instead of disclosing this information, the bank doubled down and even “heralded its fraud controls while failing to disclose the income discrepancies its controls had identified.”
2. Wells Fargo may refund latest unsuspecting customers charged for pet insurance & more
Charging for add-ons: In June 2018, the bank drew the attention of the Consumer Financial Protection Bureau, who is still looking into whether the bank deceived customers by charging them for add-ons they never asked for, according to the Wall Street Journal.
Wells Fargo said that it is in the midst of refunding the add-ons, which were for things like pet insurance and legal services, to “hundreds of thousands” of customers, the Journal reports. That means the embattled bank may be out of tens of millions of dollars for the caper, which has been going on for an undisclosed number of years.
The bank is “reviewing add-on products sold to consumers by the bank or its service providers and if issues are found during this review, we will make things right with customers in the form of refunds or remediation,” Wells Fargo spokeswoman Catherine Pulley told the Journal.
3. Wells Fargo earnings report shows scandals having negative effect
Earnings report shows dip: There is evidence that the brouhahas are taking a bite out of the bank’s bottom line. The institution’s profits sank 12% in the second quarter, according to its latest earnings report.
The bank reported recently that operating expenses were at $619 million and revenue was down about a half billion dollars.
In addition to disappointing investors, the bank reported far fewer deposits and loan originations, a sure sign that’s customers are being turned off.
Wells Fargo CEO Tim Sloan painted the earnings report in a positive light, saying in a written statement, “Our progress included making further improvements to our compliance and operational risk management programs; hiring a new Chief Risk Officer” and other things.
4. Wells Fargo slapped with sanctions for ‘widespread misconduct’
‘Widespread consumer abuses’: In February 2018, the Federal Reserve cracked down on the bank for what it called “widespread abuses.” Issuing a reckoning for practices the bank engaged in for years, the agency levied a number of penalties on Wells Fargo. As a result, the bank’s growth is being stunted and their assets are not allowed to surpass its end-of-2017 levels, the government said in a stinging rebuke.
Here’s Clark’s remedy to escape those big bank woes
All the trouble that Wells Fargo is in is one reason why money expert Clark Howard always recommends banking with a smaller financial institution.
He says if you want the best bang for your buck, then you should leave the huge banks and opt for credit unions. Although the “big banks” hold about 40% of all U.S. commercial bank assets, they come with all types of potential problems for customers, as Wells Fargo’s case illustrates.
Here are several banking alternatives to consider.