Sens. Warren, Schatz press Wells Fargo on forbearance practices
WASHINGTON — Two Senate Democrats are seeking details from Wells Fargo about news reports that the bank has been placing borrowers into mortgage forbearance programs without their consent.
Sens. Elizabeth Warren of Massachusetts and Brian Schatz of Hawaii wrote to Wells Fargo CEO Charlie Scharf on Thursday requesting more information about an NBC News report from earlier this month that said the bank was placing borrowers who had fallen behind on their mortgage payments were placed into forbearance programs without their knowledge, potentially damaging their credit reports. The report said that borrowers in 14 states told courts or NBC News that they were forced into forbearance plans without being asked.
The senators say they are concerned that the bank is putting consumers at risk of greater financial hardship in the midst of the coronavirus pandemic.
“Wells Fargo’s history of taking actions without the consent of consumers is cause for serious concern that this is another systemic failure at the bank,” the senators wrote. “Indeed, if these reports are true, they represent one more addition to a long list of inexcusable actions by Wells Fargo at customers’ expense.”
Wells acknowledged in a statement to NBC News last week that "misinterpreted customers' intentions" in some cases. "In those limited cases," the statement continued, "we are working directly with customers to ensure they are receiving the assistance they need and make any corrections to their accounts that may be required."
The news reports suggest that the bank wrongly claimed that borrowers asked to pause their mortgage payments in bankruptcy filings. Because of the way that loan servicers are compensated for forbearance, the senators say, “it is possible” that Wells Fargo profited from the alleged faulty forbearance.
Specifically, the senators are asking the bank about circumstances in which it would place a consumer who is not delinquent on mortgage payments in forbearance, and how the bank notifies consumers if their mortgages were placed in forbearance. They are asking how the bank reports information to the credit bureaus for consumers who have been placed in forbearance.
They are also asking how they bank has been compensated for forbearance filings that were not requested by borrowers, and how it handles funds for borrowers who continue to make payments while their loan is in forbearance.
Wells Fargo has been placed under a growth cap by Federal regulators over a series of scandals, including the opening of millions of accounts without consumers’ consent. But the Federal Reserve announced in April that the bank can make additional loans to small businesses through the Small Business Administration’s Paycheck Protection Program and the Fed’s Main Street Lending Program that will not count against the cap.
“But this recent reporting highlights the broken culture at the bank, and the need for Wells Fargo to remain under intense regulatory scrutiny until it is clear that the necessary changes have been made to ensure that the bank is truly committed to its consumers,” the senators wrote.
The senators are asking the bank to respond to their inquiry by Aug. 12.