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Sen. Warren Questions Wells Fargo, Again

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A Wells Fargo branch in New York (Photo: Bloomberg) A Wells Fargo branch in New York (Photo: Bloomberg)

Two U.S. senators are asking Wells Fargo CEO Charles Scharf to respond to questions about the bank’s “pausing” of mortgage payments without borrowers’ consent as part of a program tied to fallout from the coronavirus.

Sens Elizabeth Warren (D-Mass.) and Brian Schatz (D-Hi.), sent Scharf a letter Wednesday, about two weeks after NBC reported dozens of such actions by Wells Fargo. 

“These reports are highly disturbing given Wells Fargo’s recent history of illegal behavior and inappropriate treatment of customers, including over a dozen scandals involving the creation of millions of fake customer accounts, illegal repossession of service-members’ cars, wrongful foreclosure on hundreds of homes, illegal add-on charges to customers’ accounts and much, much more,” the lawmakers wrote.  

As part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, Wells Fargo gave borrowers facing hardship a forbearance option that lets them delay payments on mortgages for up to six months and in some cases for up to 12 months.  

Borrowers who were mistakenly put into these forbearance plans learned of the bank’s actions from their lawyers, according to the report. Forbearance filings can put bank clients’ homes at risk of foreclosure and may represent a fraud against the bankruptcy court, according to Warren and Schatz.

The lawmakers also say that due to how loan servicers are compensated for forbearance, Wells Fargo may have been able to profit from the forbearance filing. 

If bank clients “did not receive credit for several months of payments, their credit reports may have been damaged, and they may have lost the opportunity to modify or refinance their mortgages while interest rates were at record lows,” the letter stated.

Warren and Schatz asked the bank to respond to ongoing concerns about “its ability to comply with the law and treat its customers fairly by no later than Aug, 12, 2020.”

Wells Fargo, which has not yet responded to the letter, said in a statement: “Customers placed in forbearance received notices of that action through multiple channels, and we removed them from forbearance upon their request.

“In the spirit of providing assistance, we may have misinterpreted customers’ intentions in a small number of cases,” the bank explained. “In those limited cases, we are working directly with customers to ensure they were not harmed in any way.”

Warren has been criticizing Wells Fargo and its leadership since the fake-accounts scandal broke in 2016. In a hearing in 2017, she told the bank’s previous CEO, Tim Sloan, “you should be fired.” He stepped down in March 2019.

In February, the lawmaker probed the nation’s largest banks — including Wells Fargo and JPMorgan Chase — on how they’re mitigating economic risks due to the coronavirus.

— For more, see A Timeline of Wells Fargo’s Scandals on ThinkAdvisor.


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