Gretchen Morgenson: In Wells Fargo’s Bogus Accounts, Echoes of Foreclosure Abuses
In Wells Fargo’s Bogus Accounts, Echoes of Foreclosure Abuses
John Stumpf, the chairman and chief executive of Wells Fargo, won a dubious achievement award from one of his interrogators during Tuesday’s scorching hearings on Capitol Hill. The bank’s yearslong practice of opening bogus accounts for customers and charging fees to do so, said Senator Jon Tester, Democrat of Montana, had united the Senate Banking Committee on a major topic for the first time in a decade. “And not in a good way,” he added.
But this was not the first time problematic and pervasive activities at Wells Fargo succeeded in uniting a disparate group. After observing years of abusive mortgage loan servicing practices at the bank, an increasing number of judges hearing foreclosure cases after the financial crisis grew to understand that banks could not always be trusted in their pleadings.
This was a major shift: For decades, the nation’s courts had been largely pro-bank when hearing foreclosure cases, accepting what big financial institutions produced in documentation and amounts owed by borrowers.
“Wells didn’t intentionally educate judges. They didn’t raise their hand and say, ‘Judge, we’re sorry,’” said O. Max Gardner III, a prominent foreclosure defense lawyer who teaches consumer counsel how to represent troubled borrowers. “It was people really digging in and having the resources and the time to ask the right questions about what they were doing with the money.” Those practices included levying improper fees and incorrectly foreclosing on homes.
Rest from the NY Times here…