Wells Fargo has reached a settlement of $56.85 million to resolve a class action lawsuit that accused the bank of inaccurately reporting mortgage accounts to credit agencies. The lawsuit alleged that during the pandemic, Wells Fargo misclassified certain mortgage accounts as being “in forbearance,” despite the fact that these accounts were current in accordance with the CARES Act.
The regulations mandated that the bank report these mortgages as current, and the plaintiffs argued that the erroneous data adversely affected their credit scores. This misreporting made it more challenging for affected customers to secure loans and resulted in increased costs.
This case was filed in the San Diego Superior Court, specifically targeting homeowners in California whose mortgage accounts were legally current, even if they had entered COVID-19 forbearance after March 27, 2020. While Wells Fargo has denied any wrongdoing, the settlement aims to provide compensation to impacted customers.
The $56.85 million fund is designed to distribute payments to class members automatically, eliminating the need for any forms to be submitted. Checks will be mailed to recipients at their last known addresses following final approval of the settlement, which is anticipated in April.
This settlement follows a prior agreement of $185 million that Wells Fargo reached last year, addressing claims that the bank had placed borrowers into forbearance without their informed consent.
The implications of this lawsuit and settlement highlight the critical importance of accurate reporting by financial institutions, particularly during unprecedented times such as the pandemic. Customers affected by these inaccuracies can expect to receive compensation, though the bank maintains its stance against the allegations.
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Disclaimer: The opinions expressed in this article do not constitute investment advice. Readers should conduct their own research before engaging in any high-risk investments.
