DOJ: Wells Fargo ordered to pay huge settlement to homeowners
Some New Yorkers may want to know about a recent settlement in which Wells Fargo agreed to pay certain homeowners $81.6 million. The settlement comes because the banking giant violated some provisions and deadlines involving bankruptcy cases that the homeowners had filed.
According to the Department of Justice, Wells Fargo did not give proper notice to homeowners before raising their mortgage payment amounts. The bank also failed to meet deadlines for the analysis of escrow accounts, leading to problems with accurate accounting in the bankruptcy court. New rules that went into effect in December 2011 mandate that homeowners who are in Chapter 13 proceedings be provided with at least 21 days notice before changes are made to their mortgage payments. There are also established deadlines for completing escrow analyses.
The homeowners were all in Chapter 13 bankruptcy, a type which allows debtors to reorganize their debts while making payments over a three- to five-year period. Of the $81.6 million, $53.6 million will be applied as lump sum credits towards mortgage balances for 42,000 homeowners. Another $10 million will be paid to homeowners who didn’t receive a sufficient amount in the first settlement. The final portion is earmarked for those homeowners who made payments that were too high or who did not receive their escrow statements by the established deadlines.
Under Chapter 13, homeowners can take up to five years to catch up on their past-due mortgage amounts if the payment plan is approved by the court. This gives them the ability to stop foreclosure of their homes. During their repayment plan periods, they will need to pay portions of the past-due amount as well as their regular mortgage payment. At the end of the plan, they will then continue on with their mortgages. People who want to file for Chapter 13 bankruptcy may want to talk to a bankruptcy attorney about their eligibility