31 Aug 2017
Wells Fargo’s scandal count seems to be rising faster than the national debt clock these days. Now the lending giant is facing a lawsuit that claims it cheated mortgage borrowers by charging them extra fees when approvals were delayed – even when the delays were the bank’s fault.
The fees in question are known as rate-lock extension fees. When the borrower applies for a mortgage, the lender promises a certain interest rate – one that is only guaranteed if the loan is approved within a given time frame. If approval is delated because of an issue on the borrower’s end, the borrower has to pay a fee to extend the rate guarantee.
But if the lender is responsible for the delay, it’s supposed to eat the fee. The new lawsuit, filed by Victor Muniz of Las Vegas, claimed that Wells Fargo charged him a rate-lock extension fee of $287.50 even though his mortgage approval delays were caused by the bank, according to a Los Angeles Times report. Muniz also said a Wells Fargo banker initially told him that he wouldn’t be charged the fee.
The suit was brought against the bank on behalf of Muniz and any other Wells Fargo borrowers who may have been charged improper fees, the Times reported. It is seeking class-action status.
Muniz is being represented by Keller Rohrback, the same Seattle law firm that sued Wells Fargo over its creation of unauthorized customer accounts. That case led to a $142-million class-action settlement.
“The same profit-over-people culture that fostered Wells Fargo’s fake-account scandal appears to have led the bank to stick borrowers with unwarranted fees,” Keller Rohrback partner Derek Loeser told the Times.
Muniz’s lawsuit isn’t the only one to accuse Wells Fargo of cheating customers with improper rate-lock fees. Former mortgage banker Mauricio Alaniz, who worked for Wells Fargo, sued the bank last month. Alaniz said that the bank’s mortgage processing and underwriting departments were so understaffed that applications were frequently delayed, the Times reported. But rather than admitting the delays and waiving the rate-lock fees, Alaniz said, bank employees would blame borrowers, falsely claiming they had submitted incomplete or inaccurate information.
Wells Fargo, meanwhile, wouldn’t comment on the lawsuits but admitted it is investigating the fees.
“We continue to work through a comprehensive review of our past practices regarding rate-lock extensions that will help us evaluate the facts, and will address additional steps for our customers as appropriate,” bank spokesman Tom Goyda told the Times.