Wells Fargo says the computer error impacted certain accounts undergoing foreclosure between April 2010 and October 2015 and that around 625 customers were incorrectly denied a loan modification or were not offered one even though they were qualified, according to the filing. In about 400 cases, the customers underwent foreclosures. Wells Fargo says it is “very sorry that this error occurred”.
The information was released by the on August 3, in a routine regulatory report which said that a review of the bank’s internal systems had revealed a calculation error affecting hundreds of homeowners who had applied for mortgage modifications between April 2010 and October 2015. Wells Fargo’s underwriting tool had apparently improperly miscalculated whether homeowners were eligible for the Home Affordable Modification Program or other government programs designed to help people remain in their homes despite difficulty making payments. Because of the glitch, around 625 Wells Fargo customers either were improperly denied mortgage modifications or were not informed they could qualify to have their loan terms modified.
Wells Fargo says it has set aside $8 million to compensate these victims. The Home Affordable Modification Program helps families modify their mortgages in cases of documented financial hardship. It allows homeowners to reduce their monthly mortgage payments reduced by a median of more than $530 through interest rate adjustments, loan forgiveness, forbearance, and extended repayment terms.
While Wells Fargo released a statement saying it was “very sorry” for the error, a spokesperson denied a clear and direct causal relationship between the denial of the mortgage modifications and the subsequent foreclosures.