Texans who bank with Wells Fargo & Co. may be interested to know recent litigation the bank has been involved with. The bank is accused of reneging on their mortgage modification agreements. Homeowners who are struggling to keep their homes in light of the recent financial difficulties, brought a case against the bank as a result of “pick-a-pay” loans which were written during the so-called ‘housing bubble.’ Since then, the bank has failed to keep the promises made to these borrowers per the national class-action settlement.
The case claims that Wells Fargo failed to provide the reductions in loan balance that the bank agreed to in the class-action settlement. Even five years after the failure of the mortgage industry, homeowners have struggled to stay on their feet. These “pick-a-pay” loans allowed borrowers to choose a payment option that worked for them, but it as not disclosed to them that by choosing the lowest payment from the options, the amount owed would rise.
Since then, this “undisclosed negative amortization,” paired with the increasingly lousy housing market’s affect of the equity of homes has put hundred of thousands of homeowners into serious default. They have since been denied loan modification through Wells Fargo as a result of these programs, which were operated by smaller banks which Wells Fargo has since acquired. According to the data, in the 18-month period ending September 30, less than three percent of the 66,000 requests for loan modifications were accepted by Wells Fargo.
These complicated situations involving bank practices can be difficult to understand. For families in need of loan modifications to keep their homes, speaking with an experienced attorney can help to simplify the options and find a workable solution.
Source: The Los Angeles Times “Wells Fargo not modifying mortgages as required, lawsuit says,” E. Scott Reckard, Dec. 11, 2012