Wells Fargo & Company’s legal issues regarding ‘robo-signing’ during the foreclosure process are set to come to an end. A settlement of around a minimum of $67 million has been reached for the ‘robo-signing’ fiasco that occurred in 2011. It was alleged that company officials conducted improper verification techniques during the foreclosure process.
Authorization Required for Foreclosure Process
In judicial foreclosure states, the foreclosure process requires the lending institution to authorize (via submission of verified documents and written statements signed under affidavit by a bank official) the fact that the homeowner has defaulted on a mortgage the lender owns. The hope with this process is to restrict the possession of houses by the bank in case a bank is not able to prove the ownership of a particular mortgage or if the homeowner has not defaulted to the level laid out in the foreclosure papers.
Emergence of ‘Robo-Signing’ Scandal
In 2010, in the wake of the mortgage crisis, the robo-signing scandal appeared. It was alleged that a number of banking giants including Wells Fargo, JPMorgan Chase & Co., Bank of America Corp., and Citigroup Inc., regularly used false affidavits that had been signed by bank officials without the required review and verification of documents. The term ‘robosigner’ emerged as a result of the fact that banks were speedily approving numerous foreclosure documents without true knowledge. As a result, many homes were forced into improper foreclosure. In 2012, Wells Fargo (along with other financial institutions) reached a settlement for $25 billion for charges of faulty documents and other negligent foreclosure practices.
The Newest Settlement
Wells Fargo has not accepted the allegations, but it has agreed for the settlement to lessen litigations, uncertainty, and risks. Per the new settlement, Wells Fargo will pay out $36.5 million as down payment assistance to affected home buyers. The bank will also provide $6 million in counseling support to customers unable to make mortgage payments.
Also, Wells Fargo plans to integrate operations of residential mortgage servicing to ensure consistent management of the business. The company expects to incur $24.5 million as consolidation cost.
For information and guidance on foreclosure, you need the experts at Resnik Hayes Moradi LLP.