Wells Fargo Glitch Causes Mistaken Foreclosures

Wells Fargo, one of the largest financial institutions in the world, had a computer problem which led to at least hundreds of homeowners being denied loan modifications:

The bank said in a filing Friday the error caused about 625 customers to be denied, or not offered, loan modifications they otherwise qualified for. Foreclosures were completed in about 400 of the cases.

The customers had been using federal programs that helped families at risk of losing homes. Spokesman Tom Goyda says there’s no breakdown of where the foreclosures occurred.

The problem purportedly occurred due to:

The bank said a mistake allowed for lawyers’ fees to be included in a formula that determined if struggling homeowners qualified for federally backed assistance programs. The error led to 625 customers being incorrectly denied loan modification with 400 of them having their homes foreclosed upon, CNN reported.

Wells Fargo appears to be offering:

Wells Fargo has also said it has dedicated $8 million in relief to customers impacted by the mortgage issue. That works out to $12,800 per customer on average.

Goyda said the bank hasn’t disclosed individual awards or how it determined the amounts. But customers are receiving what Wells believes is appropriate given the circumstances, he said.

If you or your family were denied a loan modification due to Wells Fargo’s error, you could be entitled to more than just the minimum amount Wells Fargo is offering.  Foreclosure can have a devastating effect on homeowners that can’t be remedied by just a few thousand dollars.