Wells Fargo Mortgage Customers v Wells Fargo & Co.
Wells Fargo Settles Class Action Lawsuit
Wells Fargo & Co. has settled a class-action lawsuit over lending practices at its Wells Fargo Financial Inc.'s mortgage unit, which focuses on the subprime market.
Under the terms of the settlement, which must be approved by the court, Wells Fargo Financial will earmark $2.4 million for plaintiffs who are more than 60 days late on loan payments. In addition, qualifying members of the class may receive cash payments under a formula that would disperse up to $4.4 million.
The unit also 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, the bank said, and to implement other practices to benefit its customers.
The Association of Community Organizations for Reform Now, or ACORN, had alleged in the lawsuit, filed in 2003, that Wells Fargo Financial failed to properly disclose points and prepayment penalties to borrowers, and inaccurately reported loan balances for some California customers to credit reporting agencies.
San Francisco-based Wells Fargo is the fifth-largest U.S. bank by assets. The bank saw net income of $8.5 billion in 2006 on $35.7 billion in revenue.
