As many are aware, Wells Fargo Home Loans has been accused of qualifying customers into unfavorable loans. In efforts to avoid further attention, Wells Fargo attempted to settle their debt by offering their customers money. According to Scott Reckard, in his recent article in the Los Angeles Times entitled, “Wells Fargo sends refunds to some FHA mortgage customers”, borrowers had randomly received checks via mail from their mortgage home lender Wells Fargo. At first glance, what seemed like a nice surprise, these checks came with a string attached. Stated clearly, if borrowers cashed the checks, it prohibited them from suing Wells Fargo in the future.
Reckard reported, as a way for Wells Fargo to side step further litigation over steering their customers into unfavorable home loans, an estimated 10,000 letters enclosed with checks went out to Wells Fargo Home Loan’ borrowers. These unfavorable loans were written as Wells Fargo Home Loans surged to become the No. 1 originator of loans insured by the FHA.
In his article, Reckard shared how a California resident, Eric Murillo-Angelo, received a check from Wells Fargo for $6,676.89. Enclosed with Murillo-Angelo’s check was a letter stating, “You may have qualified for a conventional conforming mortgage” instead of the FHA loan he received in 2010. Also, in large print, the letter stated, “You should understand by cashing the enclosed check, you agree to release Wells Fargo Home Loans from any and all claims relating to Wells Fargo’s origination of a more expensive mortgage loan than the loans for which you may have qualified.”
Wells Fargo Home Loan costumers faced the dilemma of either cashing their checks, or not. If they did not cash their checks, the questions they faced were what other avenues of justice they could pursue. Or, at that point, who could help them fight a large corporation like Wells Fargo. After weeks of holding onto the check and debating these questions, Murillo-Angelo cashed his check and settled paying for a loan that he could be paying far less for. In his case, he had a secure job and was economically stable enough to possibly refinance into a less expensive loan later.
Fortunately, Murillo-Angelo has options to get out of the home loan that Wells Fargo gave him. However, many others have not been so fortunate. For many, their home loans have led them into escalating debt, and for many others, they face foreclosure. These refunds checks hold little meaning to borrowers who have already lost their homes or are facing foreclosure.
There is help for borrowers who have fallen victim to lenders who share the same practices as Wells Fargo. Instead of waiting for home lenders to help, it is important for borrowers to understand that they should seek outside help before trusting their home lender. It is possible to save their homes and relieve themselves from escalating debt.
James H. Magee is a Washington bankruptcy attorney who has helped many people in Pierce, Thurston, and King Counties save their homes and get on a stable financial path. With help on how to take the next step towards financial security, it is possible to overcome poor home lending practices and refinance expensive home loans into home loans that are fair and affordable.