Wells Fargo loan mod error faces Senate scrutiny

Sen. Brian Schatz is pressing CEO Tim Sloan for details

Wells Fargo loan mod error faces Senate scrutiny

Wells Fargo’s latest mortgage scandal has drawn the attention of Sen. Brian Schatz (D-Hawaii), who wrote CEO Timothy Sloan and Board Chair Elizabeth Duke to ask for details about the loan modification error that resulted in about 400 customers losing their homes to foreclosure.

In a regulatory filing, the bank disclosed a software mistake that miscalculated eligibility for loan modifications. Although the error occurred between April 2010 and October 2015, Well Fargo only made it public recently. The error caused about 625 homeowners to be denied a mortgage adjustment, some of whom eventually lost their homes.

“It is hard to overstate the impact of a foreclosure on people’s lives. In addition to causing displacement and housing instability, foreclosures have a devastating ripple effect. Foreclosures increase financial insecurity and economic hardship, they cause stress and trauma, and they can lead to related health problems,” wrote Schatz, a member of the Senate Banking Committee. “The news of this loan modification error is just the most recent incident in two years of negative developments that show a pattern of consumer harm at Wells Fargo.”

Among other questions, Schatz questioned Wells Fargo’s $8 million compensation fund for homeowners hurt by the mistake, noting that the bank did not provide information about how it arrived at this figure or how it will conduct this remediation.

Sen. Elizabeth Warren (D-Mass.) also called out Wells Fargo over the foreclosures caused by the error.

“Because of an error @WellsFargo made, 400 of its customers lost their homes. What’s the bank doing to make it right? Setting aside a few thousand dollars for each of the people affected. Pathetic. The execs who oversaw this – including CEO Tim Sloan – should be fired,” Warren tweeted.


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