A federal judge last week said that mega-bank Wells Fargo has to pay a homeowner $3.1 million, after the bank improperly charged him tens of thousands of dollars in mortgage payments and then tied his case up in court for years. Federal bankruptcy judge Elizabeth Magner minced no words in her excoriation of the bank:
Wells Fargo has taken advantage of borrowers who rely on it to accurately apply payments and calculate the amounts owed. But perhaps more disturbing is Wells Fargo’s refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods. Wells Fargo’s conduct was a breach of its contractual obligations to its borrowers. More importantly, when exposed, it revealed its true corporate character by denying any obligation to correct its past transgressions and mounting a legal assault ensure it never had to. Society requires that those in business conduct themselves with honestly and fair dealing. [...]
Wells Fargo’s actions were not only highly reprehensible, but its subsequent reaction on their exposure has been less than satisfactory. There is a strong societal interest in preventing such future conduct through a punitive award.
As Naked Capitalism’s Yves Smith noted, Wells Fargo “has an annoying habit of piously claiming it is better than other servicers when it engages in the same indefensible conduct as its peers.” Indeed, Wells Fargo has used robo-signers to fraudulently foreclosure on borrowers and has illegally foreclosed on military veterans. The bank even promoted woefully unqualified employees — including one who came to the bank from a pizza restaurant — to “vice president,” so that they could speed more foreclosures through the pipeline.
Wells Fargo’s repugnant foreclosure practices have led some to move their money out of the bank, including a group of clergy in San Francisco that pulled $10 million out of the bank and called on it “to put an immediate freeze on its foreclosures and repent for [its] misconduct.”