Mortgage

Whistleblower accuses Wells Fargo of unfair mortgage rate hikes

Bank allegedly cut corners to keep expenses low

After a year full of scandals, a whistleblower accused Wells Fargo of manipulating its clients into paying for unfair mortgage rate hikes.

The whistleblower, former loan officer Frank Chavez, explained the bank is cheating its refinance mortgage customers into paying higher mortgage rates, according to an article by Keven Dugan for the New York Post.

From the article:

The scandal-plagued bank’s Beverly Hills, Calif. branch routinely talked clients into paying higher interest rates in order to avoid fees for delays in processing mortgage-refinancing deals, a whistleblower told The Post.

That’s despite the fact that Wells Fargo’s understaffed team of loan officers at the Beverly Hills office were usually responsible for the processing delays, according to Frank Chavez, a former loan officer who has blown the whistle on other questionable tactics at the nation’s third-biggest bank.

The article explained the bank was accused of charging its borrowers rate-lock or extension fees. However, Chavez explained loan officers often suggested raising the mortgage interest rates to avoid these fees, which would cost borrowers much more over the life of the loan.

From the article:

“It sucked for everybody except the managers, who were looking good because they were keeping their expenses down,” Chavez told The Post.

“That was the real motivation behind it,” he added. “The regional manager wanted to make the expenses as small as possible.”

This latest accusation comes after a full year of scandals from Wells Fargo including the original scandal in which it opened up to 2.1 million fake accounts led to the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the city and county of Los Angeles handing down a $185 million fine.

Last week, Wells Fargo disclosed that an expanded internal investigation found that the bank opened a significantly larger amount of “potentially unauthorized” accounts than first thought, about 1.4 million more.

(Photo credit: DW labs Incorporated / Shutterstock.com)

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