As Wells Fargo & Co. continues to be hit with fallout from its sham-accounts scandal, the bank is facing allegations that it put the screws to customers in yet another way: by slapping them with fees for delays in processing mortgage applications.
A former Wells Fargo mortgage banker who worked in Beverly Hills alleged in a lawsuit this week that the bank falsified records so it could blame holdups on borrowers — and that it fired him for trying to report the practice.
The legal action follows a months-long internal investigation into the alleged abusive practices, one that contributed to an executive shake-up in the San Francisco bank’s mortgage business. ProPublica first reported on the alleged improper fees in January.
When borrowers apply for a mortgage, they are typically guaranteed a set interest rate — assuming the loan is approved within a certain time frame, often 30 to 45 days. If approval takes longer, the borrower can still get the promised rate but there are financing costs associated with extending the guarantee.