Wells Fargo confirms it may face $1bn fine over shady mortgage, insurance practices

by Ryan Smith16 Apr 2018

Wells Fargo confirmed Friday that it may be facing a $1 billion penalty for charging mortgage borrowers improper fees and charging other customers for unneeded car insurance.

The bank warned investors Friday in an earnings report that it might have to revise its first-quarter earnings results because of the fine, according to CNN Money. It was reported last week that Acting CFPB Director Mick Mulvaney was pushing for a $1 billion fine over improper rate-lock fees and unnecessary insurance, and Wells Fargo said that the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency had offered to resolve their investigations for that amount.

In October, Wells Fargo admitted that it had inappropriately charged rate-lock fees to some mortgage borrowers. The fees are generally charged when a borrower misses a deadline to lock in a promised interest rate – but in these cases, the delays were actually caused by the bank. Wells Fargo also admitted last year that it had charged more than half a million customers for auto insurance they didn’t need.

Those were only two of a plethora of scandals that have engulfed the bank over the last two years. Since 2016, the bank has been lambasted for opening millions of unauthorized customer accounts. It’s also been sued repeatedly for allegedly discriminating against minorities in mortgage lending, and criticized for botching the refund process for customers to whom it charged improper fees. Last month, it was accused of improperly closing the accounts of fraud victims.

Wells Fargo CEO Tim Sloan told analysts that he cannot promise no new scandals will arise, according to CNN Money.

“We’ve certainly had a thorough look in every nook and cranny in the company, and we’re continuing that process,” Sloan said. “(But) in terms of declaring victory and walking ahead, we’re not at that spot right now.”

 

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