As Riverside Foreclosure Attorneys, we often read about the potential settlements between banks and large investors. A recent article on CNN points out that Wells Fargo faces new fines for lending law violations. Wells Fargo has announced potential “legal costs” of $1 billion for its violation of lending laws by its mortgage division. Although the exact claims are unclear, Wells Fargo already paid the federal reserve a record amount for claims that its loans adjusters pushed lenders into subprime loans without regard to whether they could afford the home. Further, the bank has been accused of regularly pushing borrowers into subprime loans although the borrowers qualified for better loans.
While I applaud any effort to make banks accountable for the mortgage meltdown, I see two problems with the purported negotiated settlement. First, the article makes clear that any settlement will not include any criminal charges and will only be a civil penalty. Because there is only a monetary disincentive to commit fraud, it is unlikely that any settlement will stop future abuse. The second problem I see with any settlement is that it has little or nothing to do with homeowners who have been defrauded. The settlement is designed to compensate large organizations who purchased mortgage-backed securities and were misled about the risks of these securities. While the large financial institutions that purchased these securities have been misled and should be compensated, the borrowers who were steered into subprime loans will receive nothing.
Those borrowers would need to seek separate claims against Wells Fargo. At De Novo Law Firm, we have helped many borrowers who have been misled by their lender during a loan or a loan modification. If you believe you were steered into subprime loans, were given a type of loan you did not ask for, or your loan contained excessive fees, contact the Riverside Attorneys at De Novo Law Firm at (877) 346-7411.