An estimated 400 customers of Wells Fargo are believed to have lost their homes as a result of a software glitch that lead to accidental foreclosure. This glitch recently can to light after a regulatory filling and it stopped customers from modifying their mortgage while waiting for federal aid.
Wells Fargo has since apologized for this error which took place from April 13, 2010 until October 20, 2015, and promised to put aside $8 million to compensate customers.
After conducting an internal review it became apparent that an automated system wasn’t able to determine which customers were entitled to a mortgage modification throughout the period April 2010 to October 2015 when the error was noticed and rectified.
In total this accidental foreclosure impacted up to 625 customers, which was confirmed by the vice president of Well Fargo, Tom Goyda. The software glitch related to the automated system’s inability to calculate a customer’s eligibility to receive a mortgage modification.
The amount put aside for this accident may appear quite low when you consider that Wells Fargo offered mortgages in 2017 of nearly $95 billion and the largest mortgage company in the country. Additionally, this financial services company recently lost public trust when it disclosed to the banking regulators that an estimated 3.5 million fake accounts were created to help comply with Fargo’s expected sales targets.
A result of this act leads to Wells Fargo paying a hefty penalty fine of $185 million, while also firing over 5,000 people involved in the scandal. In the consumer banking sector, many of the top executives were ousted, as well as its CEO.
However, this wasn’t the last of the scandals that impacted this bank.
The latest scandal, it was found that Well Fargo willingly issued loans based on income information that they would likely know to be false. The fine issued by the U.S. Justice Department amounted to $2.1 billion.
Wells Fargo is expected to abide by a Federal Reserve cap in relation to asset growth. The bank has been asked to rectify compliance issues in the consumer banking sector that lead to misleading sales practices. Additionally, the wealth management sector is being investigated by the Securities and Exchange Commission and the Justice Department. Well Fargo reported $114 had been paid back to wealth management customers due to an overcharge issue that lasted 7-years, while the foreign-exchange clients received $171 million.
Additionally, the bank further disclosed last year that their auto-load borrowers that number 570,000 was sold an insurance package that wasn’t needed. This run for a period of 5-years and resulted in Wells Fargo putting aside $80 million to compensate customers.