More than 250,000 homeowners who had loans serviced by Wells between 2005 and 2010 and paid for the appraisals could receive at least $120 each. (Photo: CX Matiash, Associated Press)
By Kathleen Pender
Published: October 31, 2016
Updated: October 31, 2016 – 4:33pm
More than 250,000 homeowners who had loans serviced by Wells between 2005 and 2010 and paid for the appraisals could receive at least $120 each.
Wells Fargo has agreed to pay $50 million to settle a class-action lawsuit alleging that it overcharged homeowners for informal appraisals ordered after they defaulted on their mortgages.
More than 250,000 homeowners who had loans serviced by Wells between 2005 and 2010 and paid for this type of appraisal could receive at least $120 each.
Under its mortgage servicing agreement, Wells can require borrowers who default on their loan to provide an informal estimate of the home’s value, usually from a real estate broker.
Starting in 2001, Wells Fargo began ordering these “broker price opinions” through an internal group named Premiere Asset Services, according to an amended lawsuit filed in U.S. District Court in Oakland in July 2012. That group would typically pay brokers $50 for the opinion, but charge borrowers $95 to $125, the suit said.
“Our complaint alleges that the note that people signed when they took out the loans said the lender could pass through the amounts they pay a third-party to value the property. It was intended to be a pass-through. Our first allegation was they they were not allowed to mark it up,” said Roland Tellis, an attorney with Baron & Budd, which represented plaintiffs. The second was that Wells Fargo did not disclose the fees on mortgage statements.
The suit claimed that Wells Fargo violated the civil Racketeer Influenced and Corrupt Organizations Act, under which plaintiffs are eligible for treble damages and attorney’s fees. Wells Fargo and Premier Asset Services “got together and executed a scheme designed to hide the fact they were overcharging,” Tellis said. The RICO claim was certified as a class action in December.
Wells Fargo settled the suit without admitting guilt. “While we believe our practices related to Broker Price Opinions were proper and disagree with the claims in the lawsuit, we have agreed to settle the matter to avoid further litigation,” Wells Fargo spokesman Tom Goyda said in an email.
The settlement comes as Wells is trying to repair damage caused by revelations that it fired about 5,300 employees for allegedly creating more than 2 million fake deposit or credit card accounts without customer’s knowledge to meet aggressive sales quotes.
The mortgage-servicing settlement, which needs court approval, covers at least 250,000 U.S. residents who had a home mortgage serviced by Wells Fargo Bank or its subsidiaries and paid for a marked-up broker’s price opinion between May 6, 2005, and July 1, 2010.
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