It’s never been a quiet past few weeks for Wells Fargo. Just a week ago, the third largest US bank announced that it is prepared to hand out $108 million to remediate possibly force-placed auto insurances to over 570,000 customers. That is after the bank was fined $185 million for its controversial fake account scandal.
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Now, Wells Fargo announced that it will shell out $108 million as payment to the federal government to settle a case that involved charging veterans hidden fees for their refinancesand applications for federal loan guarantees.
The issue was specifically centered on a lawsuit filed back in 2006 which claimed that some VA Interest Rate Reduction Refinance Loansor IRRRLs originated by the bank should have been ineligible for the VA guarantees because of the fees attached to them – fees which were not disclosed to the borrowers.
Unsealed five years later in 2011, it sought compensation for the losses caused by the loans going to default.
Basically, the bank made loads of money by passing off fees to their borrowers which they were supposed to pay themselves. Wells Fargo denied such claims but agreed to pay a sum of $108 million to resolve the claims. Whether the money is to be paid directly to the Veterans Department or the federal government is not yet certain.
A history of settlements
It’s been a tough year for Wells Fargo, in truth. Within this period, rare were the months when the bank wasn’t resolving any outrage from furious customers. In a statement, its CEO Tim Sloan said they would commit “to serving the financial health and well-being of veterans” and are now examining any possible malpractice in the rollout of their products and services.
In another lawsuit back in 2011, Wells Fargo also paid $10 million worth of settlement money for an alleged claim that they charged excessive closing fees to about 60,000 loans for veterans as well. All the entitled veterans were paid, whether they paid the fees in question or not.
Will the latest case be its last? We can never know. Next week might no longer be a surprise.