Wells Fargo Sends Thousands of Mortgage Refunds
In an odd and unsolicited gesture of kindness, Wells Fargo has decided to mail refund checks to as many as 10,000 mortgage owners.
Accompanying the refund check, a letter telling the homeowner that they paid excess fees on their mortgages. According to the company, the refunds went out to customers who took out FHA mortgage loans between 2009 and 2011. Cashing the check comes with a caveat: waiving the right to sue the company later on.
A company spokeswoman admitted that the flubbed loans came to light as they reviewed files from two lending assets that had been shut down.
In February, Wells Fargo and four other prominent mortgage lenders came to a $25 billion dollar settlement with the Justice Department and the Attorney Generals' offices of all 50 states for the mishandling of thousands of foreclosure documents that eventually caused the collapse of the mortgage market.
Before that, Wells Fargo was involved in a $260 million dollar settlement with the Federal Reserve and Justice Department for allegedly steering borrowers into bad loans.
One mortgage professional revealed that Wells Fargo was paying out a commission of 2.5% on these FHA mortgage loans. In comparison to an average of 1.75% for other mortgage products. This gap possibly temped the more greedy and unscrupulous lenders to steer customers towards the FHA loan instead of a more appropriate options. In 2011, legislation was passed standardizing loan origination commissions.
In a year when Wells Fargo has certainly felt the consequences of their reckless practices, perhaps they finally learned their lesson; or perhaps, the refund checks are an attempt at preemptive damage control, and Wells Fargo knows more trouble is coming down the pipes.
The fact that Wells Fargo never announced or made public their plan to mail the checks certainly raises a curious eyebrow. For now its seems like recipients of these refunds would be wise to hold onto them. Would a company like Wells Fargo under-sell themselves? Their best offer is probably yet to come for those who are willing to remain patient. Surely, this is not the last we will hear of the curious case of these mysterious refund checks.
By: Javi Calderon
