Class Action Against Wells Fargo is Settled

Shannon Weidemann

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Wells Fargo Financial, Inc. was sued in a California class action lawsuit for unfair mortgage lending practices. It has settled the case and it now needs to be approved by the California Supreme Court.

In the proposed settlement, Wells Fargo Financial commits to continue for three years several improvements it had already put into practice, which have further strengthened its nonprime real estate-secured lending practices, and to implement other practices to benefit its customers. It also agrees to enact a default relief program, earmarking $2.4 million to provide relief to qualifying class members whose loans have become delinquent by more than 60 days. Qualifying class members who submit claims may also be entitled to cash payments, which will be determined using a formula to disburse up to $4.4 million.

Claims were made that Wells Fargo was not properly disclosing points and prepayment penalties. Loan balances were uncorrectly reported to the credit reporting agencies for some customers as well.