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Wells Fargo Mortgage Modification Error and Foreclosures Class Action

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In 2018, Wells Fargo revealed that “a calculation error” in the software it used to for the modification of mortgage loans. That error resulted in 870 homeowners being denied mortgage modifications they should have gotten. This class action is brought by a couple who were among those wrongly denied a modification. 

The class for this action is all persons who tried to get a mortgage modification from Wells Fargo, between April 13, 2010 and October 20, 2015, and who were denied because of the error in the underwriting software acknowledged by Wells Fargo. The class includes, but is not limited to, persons to whom the Wells Fargo sent, or should have sent, the notice referred to in paragraph 29 of the complaint.

Plaintiffs Monty and Michelle Coordes built a new home in Spokane, Washington. They financed it with a mortgage that was later acquired by Wells Fargo.

Monty Coordes lost his job in 2010 because of the recession. He and his wife tried to get a modification that would allow them to pay less on the loan until he was able to get a new job. Michelle Coordes was still working, and Monty had unemployment benefits, but Wells Fargo rejected their request, and they eventually lost their home. 

The complaint names as defendants Wells Fargo & Company, its subsidiary Wells Fargo Bank, NA, and the bank’s division Wells Fargo Home Mortgage. 

Because many people lost their jobs during the recession, and because many were paying high mortgages at the time that had set off the recession to begin with, in 2009, the federal government introduced a policy called Making Home Affordable. Its largest program was the Home Affordable Modification Program (HAMP), which allowed homeowners in financial difficulties to avoid foreclosure. 

To qualify, homeowners had to prove that they were suffering a financial hardship and also that they would be able to meet the modified mortgage payment. 

The government offered software to help banks figure out which homeowners qualified for the modified mortgages. However, the complaint says that Wells Fargo instead developed its own.

Originally the bank announced that the number of affected homeowners was 625; later this was updated to 870, of whom 545 had suffered a foreclosure after that. The bank set aside $8 million to pay to the affected customers. 

However, the complaint says that the $8 million is not enough. It says that the Coordes and other like them faced a number of harms, including “increased borrowing costs, loss of equity, eviction and other foreclosure-related fees, legal fees, devastating impacts to their consumer credit, and incidental costs related to the sudden need to move.”

The Coordes received a check from Wells Fargo for only $15,000.

The complaint claims violations of the Fair Debt Collection Practices Act, the Truth in Lending Act, the Washington State Consumer Protection Act, among other things. 

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