Yesterday the Fed announced a settlement with Wells Fargo of claims that its subprime unit had 1) deliberately steered prime borrowers into higher-cost subprime mortgage refinancings and 2) falsified income documents to put subprime borrowers into unaffordable loans. The settlement provides for an $85 million fine, plus an elaborate claims-based compensation procedure for victims, who may number 10,000 or more. Notably, families who lost their home in foreclosure as a consequence of Wells Fargo's illegal steering are to receive $7,000 for the loss of their home. That should cover some moving costs and a month's rent or so. As far as I could tell the agreement does not provide for consumers to release claims in exchange for these paltry sums, but advocates would be well advised to review settlement notices with affected consumers carefully.
The Fed announcement touts this wrist-slap settlement as the largest consumer protection enforcement fine in its history. Ample evidence that consumer protection against financial institutions needs to be transferred to a real enforcement agency at the earliest.
Comments
6 responses to “Fed to Wells: $7000 for Wrongful Foreclosure”
OK… I’m done being amused… I’m back to disgusted. There ANYone in D.C. willing to actually work for the people that pay their salaries? You know.. The taxpayers? The homeowners? The consumers? Maybe if they actually had a little protection and support there wouldn’t be a 50/50 shot at the U.S. being downgraded right now.
This latest batch obviously isn’t working… Time to line up some new guys and gals. In the meantime, check out the Home Preservation Network – yes, that’s a shameless plug, apologies Prof. Lawless – but it may be one of the few places on the web that home owners can trust for info these days. http://www.homepreservationnetwork.com/
Oh, and make sure that the Stage Coach settlement is an opt IN action. If it’s an opt OUT, as USA/Curry v. Fairbanks, FTC v EMC/Bear and FTC v C-Wide/BACHLS were (if memory serves) you’re automatically IN until/unless you opt out IN WRITING. Most likely by certain of several probably confusing dates. Nothing like giving up all of your legal rights to protect yourself b/c you were never informed that you were part of a CA.
Not that I disagree that $7000 is a small sum. I would note that there are plenty of cities in this country where $7000 will go significantly further than a month’s rent and some moving expenses. For example, although it was some years ago, I used to rent a 3bdrm house on the outskirts of Binghamton, NY for $550/month.
The first players in the “GSE Business Model” were our dear politicians who bet the US Treasury in guaranteeing the MBS securities in exchange for perks and campaign contributions. Now they are charged with resolving?????? When will the taxpayers, who are financing this theft by deception scheme, wake up?
Destroying people’s lives now has a price; now and it’s merely a cost of doing business for the protected class of players.
Pardon – but there was a glitch and a part of the previous post was ignored.
The proper submission should have read:
“Destroying people’s lives now has a price; we may not have had a number for it but now it’s merely a cost of doing business for the protected class of players.”
Does this settlement affect the various lawsuits of the attorneys general who have also sued Wells on the same or a similar basis? I’m thinking specifically of Illinois and also the suit by City of Baltimore from awhile back.