Wells Fargo placed at least 1,600 borrowers in forbearance without consent – Senator Elizabeth Warren
Wells Fargo placed more than 1,600 mortgage customers into forbearance programs without their consent, a top lawmaker contends.
It was first reported in July that Wells Fargo had placed multiple borrowers who were not delinquent in forbearance programs without their knowledge or consent, but the total number of affected borrowers wasn’t clear.
In a letter to the bank that month, Sen. Elizabeth Warren (D-Mass.) and Sen. Brian Schatz (D-Hawaii) demanded answers, accusing Wells Fargo of “putting consumers at risk of greater financial hardship amidst one of the worst economic downturns in our country’s history.”
On Thursday, Warren released a trove of documents, many marked as confidential, that Wells Fargo sent in response to the letter. Warren also wrote a letter to Federal Reserve Chairman Jerome Powell urging the Fed to “carefully evaluate” Wells Fargo’s behavior before lifting the asset cap placed on the bank in 2018 for its numerous previous scandals.
“We write to bring to your attention new and previously unreleased information regarding recent reports that Wells Fargo placed non-delinquent mortgage borrowers into forbearance without their consent, potentially putting them at risk of greater financial hardship during the coronavirus disease 2019 (COVID-19) pandemic,” Warren wrote to Powell. “…Early reports on this matter identified cases involving ‘borrowers whose payments are monitored by bankruptcy courts.’ But additional information that we have obtained from Wells Fargo reveals the extent to which Wells involuntarily placing borrowers into forbearance was a systemic practice at the institution, and a direct result of them not having the appropriate internal controls in place.”
Among the documents released by Warren was a letter from Kristy Fercho, executive vice president and head of home lending at Wells Fargo, that contained an admission that the bank had placed borrowers into forbearance “who did not explicitly request it.”
“These actions were taken to ensure that, in these unprecedented economic conditions, and at a time when we were experiencing significantly increased volumes of customer inquiries, very customer who needed a forbearance received one,” Fercho wrote in the letter, which was marked “CONFIDENTIAL TREATMENT REQUESTED”.
Fercho said that the bank “sincerely” apologized to customers who received forbearances they didn’t want.
Warren’s office said that while the bank was “unable or unwilling to identify how many total consumers were affected,” it reported having received more than 1,600 complaints about unwanted forbearances.
“What Wells Fargo did in the early days of COVID-19 provides more evidence that Wells Fargo remains broken,” Warren wrote in her letter to Powell.