Undeniably, the Wells Fargo settlement of $56.85 million has been grabbing headlines due to widespread interest among consumers throughout the country. The case was based on the claims that Wells Fargo had wrongfully reported some mortgage accounts to the credit bureaus amidst the COVID-19 outbreak.
This affected the credit scores of individuals negatively and reduced their chances of acquiring loans or credit card offers. As a result, the bank reached an out-of-court settlement for $56.85 million and didn’t have to admit any wrongdoing. Keep reading further as this guide blog is entirely dedicated to the Wells Fargo $56.85 M settlement.
What Is Wells Fargo?
Wells Fargo is an American multinational financial services organization that engages in banking, lending, investment, wealth management, and commercial financial activities. Established in 1852, it is among the largest banks in the USA, holding over $2 trillion worth of assets and offering services to millions of customers around the world. The bank was established amid the Gold Rush in California by Henry Wells and William Fargo.
Indeed, Wells Fargo has become famous for its banking activities, express deliveries and transportation services in the western part of America. The image of the Wells Fargo stagecoach is still one of the most recognizable bank brands in America. The following are the business areas in which Wells Fargo engages: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; Wealth & Investment Management.
An Overview of Wells Fargo $56.85 M settlement
The Wells Fargo $56.85 million class-action settlement addresses claims that the financial institution incorrectly indicated the condition of specific mortgages during the COVID-19 forbearance period under the CARES Act. It was alleged that there were several cases in which the mortgage borrowers in California were adversely impacted.
It was due to Wells Fargo failing to properly indicate their mortgage accounts during the pandemic-based forbearance program period. Even though Wells Fargo did not admit liability or wrongdoing, the financial institution decided to pay $56.85 million in order to resolve the issue. The eligible participants of the class action do not need to file claims since funds will be disbursed automatically.
| Field | Details |
| Settlement Amount | $56.85 million |
| Defendant | Wells Fargo |
| Lawsuit Type | Class Action |
| What caused the lawsuit? | Inaccurate Mortgage Credit Reporting During the COVID-19 Pandemic (Alleged) |
| Who was affected? | Specific California-based mortgage borrowers |
| Claim Form Requirement | None |
| Settlement Payment Method | Automatic distribution to eligible class member |
| Admission of Wrongdoing | None |
Understanding The Reasons Behind This Lawsuit – Wells Fargo $56.85 M settlement
This case is about allegations filed against Wells Fargo for misreporting the statuses of specific mortgage accounts amid the COVID-19 outbreak. According to the CARES Act, banks had to report all the eligible mortgage accounts as “current” as long as the borrower’s account status was current before entering the forbearance.
Yet, the plaintiffs stated that Wells Fargo reported these accounts as “in forbearance,” delinquent, not current, and other negative statuses, which could not be done according to the provisions of federal law. These reporting methods negatively impacted the borrowers’ credit standing and made them have problems with mortgage, auto loans, credit card applications, and other types of consumer credit.
Mortgage Forbearance For Borrowers During COVID-19 (Wells Fargo $56.85 M settlement)
Because the pandemic had led to financial difficulties, the government passed the CARES Act to help homeowners who are facing financial trouble. Under a mortgage forbearance, one can defer the mortgage payments. The lenders are supposed to keep reporting the accounts as current for those borrowers whose mortgages were up-to-date before getting into the forbearance period. These effects caused financial loss to the consumers. As per the complaint, some mortgage accounts of Wells Fargo customers have been reported differently, leading to the following issues:
- Decrease in credit scores
- Inability to get new loans
- Increase in interest rates
- Delay in the opportunity to refinance their homes
- Entries in their credit reports
Eligibility Criteria For Wells Fargo $56.85 M settlement
The criteria for qualifying are based on the settlement agreement and the approved class definition. The settlement generally applies to California residents with a:
- Wells Fargo-serviced mortgage of a California property.
- Current mortgage account before getting forbearance from the CARES Act.
- COVID-19 forbearance since March 27, 2020.
- Current mortgage account reported as being “in forbearance” or something similar to the credit reporting agencies.
How Much Money Could You Get Under Wells Fargo $56.85 M settlement?
The amount that each qualifying member of the Wells Fargo class will receive from the $56.85 million settlement will be affected by a number of considerations, such as the total number of qualifying individuals, the legal fees incurred, the cost of settling this lawsuit, and other deductions that the court allows.
After all these costs are subtracted from the total settlement, what is left will be divided among the qualifying class members. Since the number of qualifying people and deductions can vary, individual payments will not be equal.
Do You Have To File Any Claims For The Wells Fargo $56.85 M settlement?
The other most vital thing about this settlement is that eligible consumers usually do not need to fill out a claim form in order to receive compensation. According to the notices, payments will be made to those consumers who are eligible for the compensation.
That too without having to fill out any claim form since their information will be collected from Wells Fargo and other processes of settling the matter. Therefore, there is no need for such borrowers to fill out documentation, complete applications, provide proof of damages, or register online.
Conclusion
This Wells Fargo $56.85 million settlement addresses the claims made against the financial institution regarding its improper reporting of some mortgage accounts while under coronavirus forbearance. This action may have resulted in some harm to their credit scores and opportunities. Despite the fact that Wells Fargo claims that there has been no wrongdoing on their part, they have settled and provided compensation for class members from California who may be eligible to receive compensation. Notably, in most cases, it is not necessary to make a claim to receive money.
FAQs
What is the Wells Fargo $56.85 million settlement?
It is a class action settlement related to a claim that Wells Fargo made misrepresentations about certain mortgage accounts during the forbearance period during the COVID-19 pandemic.
Must the eligible customer submit a claim?
No, the eligible class member does not have to make any claim in order to receive compensation.
Who can receive a settlement amount?
Some eligible Californian homeowners who had mortgage loans serviced by Wells Fargo, which was misreported after being granted CARES Act forbearance.
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