Wells Fargo customers lose homes due to IT glitch
Hundreds of Americans have had their homes foreclosed on after software used by Wells Fargo incorrectly denied them mortgage modifications.
According to Reuters and CNN Money, who noticed the issue in a regulatory filing, the bank says it has set aside $8 million to compensate customers affected by the glitch.
CNN Money explains that the same filing also disclosed that Wells Fargo is facing “formal or informal inquiries or investigations” from unnamed government agencies over how the company purchased federal low-income housing tax credits. The document states the probes are linked to “the financing of low income housing developments,” but does not offer further details.
Wells Fargo says the computer error affected “certain accounts” that were undergoing the foreclosure process between April 2010 and October 2015, when the issue was corrected.
About 625 customers were incorrectly denied a loan modification or were not offered one even though they were qualified, according to the filing. In about 400 cases, the customers were ultimately foreclosed upon.
Wells Fargo says it was “very sorry that this error occurred” and that it was “providing remediation” to the affected customers.
A spokesperson for the bank adds that “there’s not a clear, direct cause and effect relationship between the modification” denials and foreclosures, but confirmed customers who were denied modifications lost their homes.
This incident is another setback for the bank.
Back in June, the United Services Automobile Association (USAA) was suing Wells Fargo on grounds of intellectual property charges for unspecified damages, over USAA’s remote deposit capture patents.
In April, Wells Fargo was hit with a $1 billion fine by the Consumer Financial Protection Bureau (CFPB) for its auto-loan administration and mortgage practices.
While last year, the scandal of employees at Wells Fargo creating millions of fake bank accounts and credit card numbers to boost sales figures got bigger… and worse.