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Wells Fargo Ends 'Robo-Signing' Lawsuit

zacks.com | June 1, 2014

By Zacks Equity Research

Wells Fargo & Company (WFC - Analyst Report) is set to end the legal tussle it has been encountering since 2011 for a settlement of around a minimum of $67 million in connection with the ‘robo-signing’ fiasco. It was alleged that the company officials have conducted improper verification of documents in the home-foreclosure process.

The Background

In a judicial foreclosure state, the foreclosure process requires that the lending institution must authorize the fact that the homeowner has defaulted on a mortgage which the lender owns. It needs to be authorized through submission of verified documents and written statement duly signed under affidavit by a bank official. The objective is to restrict the possession of houses by the bank in the event where the bank is unable to prove the ownership of the particular mortgage or where in actuality the homeowner has not defaulted to the extent stated in the foreclosure papers.

In the wake of the mortgage crisis, in 2010, the robo-signing scandal popped up, according to which a number of banking giants including Wells Fargo, JPMorgan Chase & Co. (JPM - Analyst Report), Bank of America Corp. (BAC - Analyst Report) and Citigroup Inc. (C - Analyst Report) regularly used false affidavits signed by bank officials without proper review and verification of documents. The term ‘robosigner’ was coined as the fact that bank official of companies speedily approved numerous foreclosure documents without true knowledge. This amounted to breach of law and faulty documents that caused improper foreclosure of homes.

Notably, in 2012, Wells Fargo along with other financial institutions reached a settlement for $25 billion owing to charges of faulty documents and other doubtful foreclosure practices.

The Settlement

Though Wells Fargo has not accepted the allegations, it has agreed for the settlement to lessen litigations, uncertainty and risks.

As per the latest settlement, Wells Fargo will shell out $36.5 million as down payment assistance to affected home buyers in places including California's Central Valley, Detroit, St. Louis and Virginia Beach, VA. Further, the bank will provide $6 million in counseling support for its customers who are in a difficult position to make mortgage payments.

Also, Wells Fargo will integrate operations of residential mortgage servicing in order to ensure consistent management of the business. The company expects to incur $24.5 million as consolidation cost.

 

Back to June 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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