Stealth Mortgage Modifications


Wells Fargo mortgage division engaged in a routine practice of “stealth” mortgage modifications to sneak through changes to unsuspecting homeowners in bankruptcy without their authorization. The bank made unauthorized and illegal changes to mortgages that would extend the terms of borrowers loans by decades, meaning they would have monthly payments for far longer and would ultimately owe the bank much more, all without homeowners’ knowledge or approval.

Under a settlement with the Justice Department in November 2015, the bank agreed to pay $81.6 million to borrowers in bankruptcy whom it had failed to notify on time when their monthly payments shifted to reflect different real estate taxes or insurance costs.

Wells Fargo acknowledges that it failed to timely file more than 100,000 payment change notices (PCNs) and failed to timely perform more than 18,000 escrow analyses in cases involving nearly 68,000 accounts of homeowners in bankruptcy between Dec. 1, 2011, and March 31, 2015.