Home » Wells Fargo Bank

Category Archives: Wells Fargo Bank

Categories

Wells Fargo Bank Agrees to Pay $3.6 Million in Penalties to Settle Claims by CFPB

Wells Fargo Bank, one of the largest U.S. private student loan lenders was accused by Consumer Financial Protection Bureau (CFPB) of illegal loan servicing practices. The company claimed in a New York Times news article on August 27th, 2018 that they were aware of the issues and had started to correct the problem before CFPB began their examination. The examination was a result of thousands of borrowers’ claims accusing the banking institution of providing misinformation concerning payment options. Borrowers also claimed Wells Fargo Bank allocated their payments to maximize late fees.

If they had more than one loan, the loans weren’t consolidated, but remained as separate loans. Wells Fargo would split their payments without allowing borrowers to specify how they wanted to allocate their payments. The consent order stated after a thorough examination that Wells Fargo failed to inform customers of their right to allocate payments. The order also stated the student loan servicing institution made it very difficult for borrowers to control costs. CFPB found Wells Fargo Bank used illegal loan servicing practices which cost borrowers higher costs and fees.

Americans owe trillions of dollars in student loan debts. The Consumer Financial Protection Bureau is doing everything possible to ensure loan servicing institutions, whether private or federal practice fairly with all borrowers. CFPB regulator, Seth Fortman said he noted in a mid-2016 report that borrowers complained often about federal loan servicers. They were accused of making it difficulty for them to enroll in special programs that lower their federal loan payments. Monthly payments are normally based on the borrower’s net earnings and monthly household expenses, including food, housing and etc.

According to New York Times, Wells Fargo didn’t deny nor admit to the findings of Consumer Financial Protection Bureau. Wells Fargo was also ordered to pay some borrowers $410,000 after finding the bank charged them higher costs and fees for serving their student loans. When consumers file complaints involving private and federal student loan servicers, CFPB has authority to investigate and examine their claims. Wells Fargo didn’t defend their actions, but stated they had already started the process of correcting their student loan servicing practices.