Mass. Senator Elizabeth Warren demands answers over latest Wells Fargo scandal
Democratic lawmakers are demanding answers as Wells Fargo becomes embroiled in yet another scandal – this time, over putting mortgage customers in mortgage forbearance programs without their consent.
In recent weeks, there have been multiple reports that the scandal-plagued bank has placed borrowers who were not delinquent in mortgage forbearance programs without their
knowledge or consent. Some borrowers said they only learned of Wells Fargo’s actions from their lawyers, rather than the bank itself. There have also been reports that the bank has made misrepresentations to bankruptcy courts about borrower’s requests for forbearance.
In a letter to Wells Fargo CEO Charles Scharf, Sen. Elizabeth Warren (D-Mass.) and Sen. Brian Schatz (D-Hawaii) accused the bank of “putting consumers at risk of greater financial hardship amidst one of the worst economic downturns in our country’s history.”
Warren and Schatz called the latest scandal “highly disturbing” given the bank’s recent history of illegal behavior and mistreatment of customers, “including over a dozen scandals involving the creation of millions of fake customer accounts, illegal repossession of servicemembers’ cars, wrongful foreclosure on hundreds of homes, illegal add-on charges to customers’ accounts, and much, much more.”
“This scandal-ridden history reveals a broken culture at Wells Fargo, and a bank that appears to be incapable of self-governance,” the senators wrote. “The new reports raise even more questions about the inability of Wells Fargo and its leadership team to comply with the law and the needs of its customers.”
Warren and Schatz cited multiple cases in which Wells Fargo wrongly claimed that borrowers asked to put their mortgage payments on hold in forbearance plans.
“These forbearance filings were based on nonexistent requests from customers,” the senators wrote. Wells Fargo has claimed that “may have misinterpreted customer intentions” in some cases.
Borrowers in at least 14states who were not delinquent on their loans had their mortgages put into forbearance without their knowledge or consent, Warren and Schatz said.
“These consumers were hurt in several ways by this practice: they did not receive credit for several months of payments, their credit reports may have been damaged, and they may have lost the opportunity to modify or refinance their mortgages while interest rates were at record lows,” the senators wrote.
Warren and Schatz said they supported servicers taking action to help distressed borrowers, and it was not their intent to discourage the bank from helping customers if the current scandal turns out to be limited to errors in a few isolated incidents.
“However, Wells Fargo’s history of taking actions without the consent of consumers is cause for serious concern that this is another systemic failure at the bank,” they wrote. “Indeed, if these reports are true, they represent one more addition to a long list of inexcusable actions by Wells Fargo at customers’ expense. The practices described in these reports are eerily similar to previous Wells Fargo scandals.”
The senators demanded a response from Scharf explaining the steps Wells Fargo took to place customers in forbearance plans, and how the bank notified those customers. They also asked how many loans the bank had placed in forbearance, and if Wells Fargo had “been compensated for forbearance filings not requested by the borrower.”
They also took Scharf to task for failing to clean up the bank’s scandal-ridden culture.
“You were appointed nearly ten months ago after your two predecessors were dismissed for their incompetence and inability to institute meaningful reforms at the bank,” Warren and Schatz wrote. “We had hoped you would bring the needed change to Wells Fargo’s culture following years of false promises and continued scandals, and we were initially encouraged by press reports that indicate that you were undergoing an ‘intense review’ of the banks operations and meeting with executives, ‘grilling them about the ways they do business.’ But this recent reporting highlights the broken culture at the bank, and the need for Wells Fargo to remain under intense regulatory scrutiny until it is clear that the necessary changes have been made to ensure that the bank is truly committed to its consumers.”