Wells Fargo Sued for Denying Pick-A-Pay Loan Modifications
In 2009, Wells Fargo acquired Wachovia, a financial services company based in Charlotte, and has since had to clean up the company’s messes. One of those messes involves Wachovia’s former Pick-A-Pay loan system. The loans enabled borrowers to choose from a variety of payment options to fit particular budgets. Unfortunately, Wachovia did not make it clear that choosing the lowest payment option would increase the amount borrowers owed.
The lack of clarity caused quite an uproar and after acquiring Wachovia, Wells Fargo agreed to settlements with borrowers and investors. These settlements included loan modifications for those who requested them.
According to a lawyer representing plaintiffs in a new suit, Wells Fargo has only accepted 1,746 of 66,000 requested loan modifications as of Sept. 30. The lawyer told the L.A. times he believed the bank has no reason for denying borrowers’ requests for modifications.
In the suit, prosecutors accuse Wells Fargo of breaking terms of the settlements, acting in bad faith, and violating a state unfair competition law. Outside the suit, the aforementioned lawyer has also requested of the court that all foreclosures related to the loans stop until he concludes his investigation.
Wells Fargo denied the accusations in a statement, saying it has provided modifications for almost 110,000 Pick-A-Pay borrowers and offered more than five million dollars in principal reductions since 2009.
Source: The Consumerist