Wells Fargo sued for placing borrowers in forbearance without consent

Wells Fargo is being sued in a class-action lawsuit that accuses the bank of putting some of its borrowers’ mortgages into forbearance without their consent. By doing so, the borrowers’ credit reports were negatively impacted, and that prevented them from obtaining other financial services, they say.

The bank responded to the accusations by saying that it only placed accounts into forbearance after those customers notified them that they were experiencing financial hardship as a result of the COVID-19 pandemic. The bank said it wanted to “ensure that every customer who needed payment relief would receive it without unnecessary delay”.

"We sincerely apologize to any customer who received a forbearance and did not expressly request one, and [we] are actively working to assist each customer who may have been negatively affected," Tom Goyda, a spokesperson for Wells Fargo, said in the statement to Law360.

The federal government’s recent Coronavirus Aid, Relief and Economic Security Act comes with a provision that allows mortgage borrowers who face economic hardship due to the pandemic to ask for temporary forbearance on their loan.

One of the claimants, Pamela Delpapa, told Law360 that she’d been unable to refinance her home and get a better mortgage rate because Wells Fargo placed her loan in forbearance, despite not asking for that.

“Banks may not institute it automatically,” the lawsuit against Wells Fargo states. “But that’s exactly what Wells Fargo did. As documented by the plaintiff and in consumer complaints from across the nation, Wells Fargo automatically placed borrowers in forbearance when they contacted the bank by phone or online to merely inquire about their options.”

A second lawsuit filed in July makes similar allegations against Wells Fargo. NBC News said that borrowers in Chapter 13 bankruptcy also claimed that their loans were placed in forbearance without giving consent.

In a statement given to Law360, Wells Fargo said: “For a short period during the early stages of the crisis, in an attempt to ensure that all customers received the payment relief they needed in the midst of unprecedented levels of customer calls, we made a decision to provide mortgage forbearances to certain customers who had made an inquiry or expressed hardship but had not explicitly requested a payment suspension.”

The bank said it notified all customers whose loans had been placed in forbearance, and says it also told them how to change that status if need be.