In a regulatory filing recently, Wells Fargo had disclosed that almost 400 of its customers lost their homes when they were accidentally foreclosed on.
A software glitch had denied the customers the ability to modify their mortgages as they looked for federal aid.
Wells Fargo apologized for the ordeal and also set aside an $8 million allotment to compensate those who had been affected by the glitch which occurred from 2010 all the way to 2015.
“During the course of an internal review, we determined that an automated calculation error may have affected the decision on whether or not to offer or approve some mortgage modifications between April 13, 2010 and Oct. 20, 2015, when the error was corrected,” said Tom Goyda to the Business Times. He is senior vice president of Wells Fargo.
He added, “We’re very sorry that this error occurred and are providing remediation to the approximately 625 customers who may have been impacted.”
According to the bank, the software mistake had miscalculated customers’ eligibility for mortgage modifications and roughly 625 customers were denied loan modifications they sought from a federal program to help homeowners avoid foreclosures, because of the error.
Sen. Elizabeth Warren tweeted, “Because of an error @WellsFargo made, 400 of its customers lost their homes. What’s the bank doing to make it right? Setting aside a few thousand dollars for each of the people affected. Pathetic. The execs who oversaw this — including CEO Tim Sloan — should be fired.”
“It’s disgraceful that Wells Fargo has once again failed customers so miserably,” remarked Al Ripley, director of the N.C. Justice Center’s consumer and housing project.
He added, “The federal government and all state attorneys general should launch an investigation of these most recent revelations about Wells Fargo’s mortgage servicing and aggressively represent those homeowners.”
Wells Fargo is still struggling over a scandal that ousted its CEO and many executives as well as the firing of over 5,000 people. This kind of error adds more to the mistrust the company had been facing.
Wells Fargo had agreed to pay $185 million in penalties and $5 million to customers in a case where it had opened accounts without customers’ permission.
Separately, the company has also agreed to pay $2.1 billion to the U.S. Justice Department, in a fine for issuing loans that it knew were based on false income information.
Last year Wells Fargo also said that it had charged 570,00 auto-loan borrowers for insurance they did not ask for or need from the year 2012 to 2017.