Wells Fargo blamed a computer glitch for the second time this year that resulted in the bank mistakenly foreclosing on hundreds of homes over an eight-year period, CBS News reported. The software error applied to loan modification applications submitted between March 15, 2010, and April 30, 2018, according to Wells Fargo.
In November, Wells Fargo admitted the error in a filing with the United States Securities and Exchange Commission, noting that a computer glitch led the bank to deny its mortgage customers the request for a loan modification or repayment plan in 870 instances. Eventually, 545 homes were foreclosed because of Wells Fargo’s error.
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Jose Aguilar, who owned one of the foreclosed homes, told his story in a CBS News interview. To compensate Aguilar for its mistake, Wells Fargo sent him an apology letter as well as a check in the amount of $25,000, but Aguilar still wants an explanation, and his lawyer stated that the amount “doesn’t even begin to cover his total losses.”
In its SEC filing last month, Wells Fargo cited that a calculation error occurred when the bank implemented new controls that led it to overestimate the attorney’s fees for homeowners in the foreclosure process. This accounting error caused the bank to reject loan modification requests.
“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 Wells Fargo spokesperson told Reuters at the time.
This, however, isn’t the first time that a Wells Fargo error had resulted in homes being foreclosed. Wells Fargo disclosed in August that a different calculation error in its underwriting software had resulted in 625 borrowers to be denied for similar loan modifications under a federal assistance program. That error resulted in approximately 400 homes being foreclosed.
Combined with this recently reported error, nearly 1,000 homes have now been foreclosed as a result of a mistake that Wells Fargo is now blaming on its computer software.
“Wells Fargo said it plans to work with each of those customers to reach a resolution,” CBS reported. “The bank is also offering no-cost mediation. Meanwhile, non-profit groups and some legislators are pushing for more answers.”
After the bank reported its August error in handling the federal assistance program, it revealed that it had set aside $8 million to compensation errors. It’s unclear if additional funds have been reserved for the latest errors disclosed in November.
Both mortgage debacles add to Wells Fargo’s lengthy list mishaps in recent years that has created a public relations nightmare for the bank. Wells Fargo has been under scrutiny due to prior banking practices that resulted in bankers opening unauthorized accounts on behalf of clients, overcharging customers, and the mistreatment of customers in its auto lending business. The bank agreed to a $1 billion settlement earlier in 2018. Last year, Wells Fargo was in the news for a security breach where 1.4GB of customer information was mistakenly shared with lawyers in an inadvertent leak.
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