Mortgage

Wells Fargo to pay $50 million to settle claims of overcharging for appraisals

Accused of hiking up appraisal prices for struggling borrowers

It’s been a rough few weeks for Wells Fargo and things aren’t about to get any better.

In the fallout from the bank’s fake account scandal, Wells Fargo lost its CEO, lost business from the state of Ohio, the city of Chicago, the state of California, the state of Oregon and maybe the city of San Francisco too, and lost its accreditation from the Better Business Bureau as well.

And now, a new report from Reuters states that Wells Fargo is set to pay $50 million to settle claims that the bank overcharged “thousands of homeowners” for appraisals conducted after the borrower defaulted on their mortgage.

According to the Reuters report, the settlement agreement is not yet finalized and awaiting approval in federal court in Oakland, California.

Here are the details, courtesy of Reuters:

If approved, it will resolve nationwide claims that Wells Fargo charged much more than it paid for third-party appraisals, exploiting borrowers who could least afford it and driving them further into default.

According to the lawyer who represented the plaintiffs, the settlement would cover approximately 250,000 homeowners that were supposedly overcharged for appraisals.

Again from Reuters:

Mortgage agreements allow banks to charge homeowners for the appraisals if they default on their mortgage loans, but Wells Fargo added large mark-ups to the amounts its third-party vendors charged, the 2012 lawsuit said.

Wells Fargo typically charged $95 to $125 for the type of expedited appraisal at issue, when the actual cost was $50 or less, the complaint said. The charges added hundreds or thousands of dollars to borrower's mortgage loans over time, the lawsuit said.

According to the Reuters article, the increased charges went unnoticed by many borrowers because they were listed under “cryptic” descriptions like “other charges.”

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