Business

Wells Fargo sees second underwriting error

Bank says internal error caused more home foreclosures than expected

Los Angeles Times/TNS

Wells Fargo says an internal error cost hundreds more people their homes than the bank initially thought.
Los Angeles Times/TNS Wells Fargo says an internal error cost hundreds more people their homes than the bank initially thought.

Wells Fargo said Tuesday an internal underwriting error had caused it to reject home loan modifications, resulting in the bank foreclosing more homes than expected.

The bank said in a filing with regulators that an expanded review found that 870 customers were incorrectly denied mortgage changes, leading to 545 of them losing their homes.

This comes after the bank in August for the first time had disclosed a calculation error in an internal underwriting software had caused 625 borrowers to be incorrectly denied mortgage loan modifications under a federal assistance program, 400 of whom had their homes foreclosed upon.

“We’re very sorry that the errors occurred and have assigned a single, dedicated point of contact to ensure that each customer is engaged with and assisted individually,” a bank spokesman wrote in an email.

The bank said the expanded review still is underway and took into account customers who were in the foreclosure process between March 15, 2010, and April 30, 2018.

Goyda said the bank had contacted a substantial majority of the affected customers to provide remediation as well as the option to pursue no-cost mediation with an independent mediator.

The revelations are an additional headache for the San Francisco-based bank which is facing numerous regulatory penalties and private lawsuits, most of which stem from a sales practices scandal that touched on all of the bank’s major business units.

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In August, the bank said it rectified the calculation errors and had set aside $8 million to compensate borrowers.

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