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May 25, 2016 - OCC terminates Wells Fargo's mortgage servicing restrictions. Fined $70 million civil money penalty.

August 11, 2016

UNITED STATES OF AMERICA
DEPARTMENT OF THE TREASURY
COMPTROLLER OF THE CURRENCY

In the Matter of:
Wells Fargo Bank, N.A.
Sioux Falls, South Dakota

AA-EC-2016-30


CONSENT ORDER FOR A CIVIL MONEY PENALTY

The Comptroller of the Currency of the United States of America (“Comptroller”), through his national bank examiners and other staff of the Office of the Comptroller of the Currency (“OCC”), conducted an examination of Wells Fargo Bank, N.A., Sioux Falls, South Dakota (“Bank”). The OCC identified deficiencies in the Bank’s practices that resulted in violations of Consent Order, AA-EC-11-19, dated April 13, 2011 (“2011 Consent Order”), between the Comptroller and the Bank and has informed the Bank of the findings resulting from the examination.

The Bank, by and through its duly elected and acting Board of Directors, has executed a Stipulation and Consent to the Issuance of an Order for a Civil Money Penalty, dated May 24, 2016, that is accepted by the Comptroller (“Stipulation”). By this Stipulation, which is incorporated herein by reference, the Bank has consented to the issuance of this Consent Order for a Civil Money Penalty (“Order”) by the Comptroller.

ARTICLE I

COMPTROLLER’S FINDINGS

The Comptroller finds, and the Bank neither admits nor denies, the following:

(1) The Bank violated the 2011 Consent Order from October 1, 2014, through August 31, 2015, by failing to achieve compliance in a timely manner with the 2011 Consent Order as detailed in the June 16, 2015 Amended Consent Order (“2015 ACO”).

(2) On May 24, 2016, the Comptroller terminated the 2011 Consent Order, the Amendment to the Consent Order dated February 28, 2013, and 2015 ACO, having found that the Bank had satisfied all requirements of the 2015 ACO as of August 31, 2015.

(3) Between December 1, 2011, and March 31, 2015, the Bank identified 84,480 active accounts for which a Payment Change Notice (“PCN”) was or should have been filed.

(4) Of the 84,480 active accounts, there were 54,837 for which the Bank filed an untimely PCN or missed filing a PCN altogether. Of the 54,837 active accounts, 42,756 accounts had an increase in the payments associated with the untimely filed or missed PCN.

(5) The Bank’s untimely and missed PCN filing practices described in Paragraphs (3) – (4) of this Article did not comply with Bankruptcy Rules, required the Bank to undertake operational enhancements to achieve compliance, and were unsafe and unsound practices. These practices also resulted in a settlement with the United States Trustee Program in the case In re Ernestine C.J. Greene, Case No. 11-33377 (Bankr. D. Md.) on November 19, 2015.

(6) Between March 2013 through October 2014, the Bank made escrow calculation errors in 76,720 accounts due to an error in a proprietary loan decisioning software tool.

(7) The escrow calculation errors led to escrow overages in 29% of the loan population and escrow shortages in 67% of the loan population. The escrow calculation errors also led to approximately 184 incorrect loan modification denials.

(8) The Bank’s escrow calculation errors described in Paragraphs (6) – (8) of this Article required the Bank to undertake operational enhancements to achieve compliance, and were unsafe and unsound practices. The Bank has since corrected the borrower escrow calculations and has provided, or is in the process of offering, remediation to borrowers who had received an incorrect loan modification denial.

ARTICLE II

ORDER FOR A CIVIL MONEY PENALTY

Pursuant to the authority vested in him by the Federal Deposit Insurance Act, 12 U.S.C. § 1818(i), the Comptroller orders, and the Bank consents to the following:

(1) The Bank shall make payment of a civil money penalty in the total amount of seventy million dollars ($70,000,000), which shall be paid upon the execution of this Order:

(a) If a check is the selected method of payment, the check shall be made payable to the Treasurer of the United States and shall be delivered to: Comptroller of the Currency, P.O. Box 979012, St. Louis, Missouri 63197-9000.

(b) If a wire transfer is the selected method of payment, it shall be sent in accordance with instructions provided by the Comptroller.

(c) The docket number of this case (AA-EC-2016-30) shall be entered on the payment document or wire confirmation and a photocopy of the payment document or confirmation of the wire transfer shall be sent immediately, by
overnight delivery, to the Director of Enforcement and Compliance, Office of the Comptroller of the Currency, 400 7th Street, S.W., Washington, D.C. 20219.

(2) This Order shall be enforceable to the same extent and in the same manner as an effective and outstanding order that has been issued and has become final pursuant to 12 U.S.C. § 1818(h) and (i).

ARTICLE III

OTHER PROVISIONS

(1) This Order is intended to be, and shall be construed to be, a final order issued pursuant to 12 U.S.C. § 1818(i)(2), and expressly does not form, and may not be construed to form, a contract binding on the Comptroller or the United States.

(2) This Order constitutes a settlement of the civil money penalty proceeding against the Bank contemplated by the Comptroller, based on the practices and violations of law described in the Comptroller’s Findings set forth in Article I of this Order. The Comptroller releases and discharges the Bank and its subsidiaries from all potential liability for a civil money penalty that has been or might have been asserted by the Comptroller based on the practices and violations described in Article I of this Order, to the extent known to the Comptroller as of the effective date of this Order. Nothing in the Stipulation or this Order, however, shall prevent the Comptroller from:

(a) instituting enforcement actions other than a civil money penalty against the Bank based on the findings set forth in Article I of this Order;

(b) instituting enforcement actions against the Bank based on any other findings;

(c) instituting enforcement actions against the Bank’s institution-affiliated parties based on the findings set forth in Article I of this Order, or any other findings; or

(d) utilizing the findings set forth in Article I of this Order in future enforcement actions against the Bank or its institution-affiliated parties to establish a pattern or the continuation of a pattern.

Further, nothing in the Stipulation or this Order shall affect any right of the Comptroller to determine and ensure compliance with the terms and provisions of the Stipulation or this Order.

(3) The terms of this Order, including this paragraph, are not subject to amendment or modification by any extraneous expression, prior agreements, or prior arrangements between the parties, whether oral or written.

IT IS SO ORDERED, this _ 24_ day of May, 2016.
___/s/___________
Greg J. Coleman
Deputy Comptroller
Large Bank Supervision

Continue Reading - Full Consent Order (PDF)
Wells Fargo 2016 Second Quarter Form 10q Pages 100-110 (PDF)
ORDER TERMINATING Wells 2011, 2013, 2015 Consent (PDF)

 

 

 

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