Wells Fargo Accused of Selling Predatory Mortgages
Wells Fargo is facing a new lawsuit. The financial giant and a group of affiliated mortgage lenders are accused of using deceptive tactics to push customers into a “complicated, risky and expensive” mortgages so they could sell as many loans as possible to third party investors. This was allegedly done even though the bank knew that customers would likely default on their mortgages.
This Wells Fargo lawsuit was filed by Oakland resident John H. Ellis. It also includes Wachovia Mortgage, FSB, Golden West Savings Association and Mortgage Electronic Registrations Systems, Inc (MERS).
Ellis says that he and tens of thousands of other borrowers were coaxed into adjustable rate mortgages. The lawsuit alleges that these mortgages were “technically engineered” to end in default, foreclosure, and eviction. They were designed to “systematically and dramatically increase monthly payments to the extent that the payment terms, conditions and provisions extended far beyond affordability,” the lawsuit says.
Ellis is suing Wells Fargo for fraudulent concealment, originating falsified documents and foreclosing on homeowners in the Federal Making Home Affordable Plan. He’s seeking restitution and damages of between $3.75 million and $6.25 million, plus interest, fees and costs.
Wells Fargo already reached a $18.5 million settlement last month with mortgage customers who lost their homes due to banking. A previous lawsuit also accuses the bank of running a fraudulent mortgage servicing scheme, where it collected illegal fees for property inspections, resulting in bankrupted homeowners.