On Friday, the Reuters news agency began reporting about the news of a new investigation of the company, its implications, and the official Wells Fargo response. According to the report, hundreds of homeowners had their houses foreclosed on as a result of a software glitch that mistakenly denied requested mortgage modifications. Wells Fargo announced that the malfunction caused 625 customers to be denied a mortgage loan modification. In some cases, customers were not offered a loan despite meeting the stated qualifications. Of these 625 cases, approximately 400 were eventually forced into foreclosure. The affected accounts were in the midst of the foreclosure process between April 2010 and October 2015. The issue has since been corrected.
The embattled banking giant has been involved in a myriad of controversies and scandals over the last few years. In this week’s regulatory filing, the company said that it has set aside $8 million in funds to compensate those affected customers. Wells Fargo also said in an official statement that it was sorry for the error and it would work to provide remediation for its customers.
The filing also disclosed that the company is dealing with impending “formal or informal inquiries or investigations” over how Wells Fargo bought federal low-income housing tax credits. Although the charges are brought by unnamed government agencies yet to determined, other details of the filing are scarce.
Also this week, the US Justice Department announced that Wells Fargo has agreed to pay a $2.1 billion fine for approving mortgage loans to customers, despite knowing that the reports contained erroneous information about income levels and other pertinent data. The federal government stated that these loans were an impetus behind the 2008 financial crisis, felt most strongly in the crippling housing market with massive ripple effects stretching to a global scale.