Wells Fargo Settles COVID-19 Mortgage Forbearance Lawsuit for $185 Million
Settlement Agreement
Wells Fargo has reached an agreement to pay $185 million to resolve a proposed class action lawsuit that accused the bank of placing customers' mortgages into forbearance without their consent during the initial phase of the COVID-19 pandemic. The court granted preliminary approval for the Wells Fargo class action settlement in July 2024, and further details can be accessed at WellsFargoCovidForbearanceLitigation.com.
This settlement will offer compensation to a group of residents in the United States who had their mortgages serviced by Wells Fargo and were placed into a COVID-related mortgage forbearance without proper informed consent between March 1, 2020, and December 31, 2021. This includes individuals who signed the deed of trust, mortgage, or other security documents related to the mortgage, regardless of whether they signed the underlying promissory note or loan. However, the settlement does not cover individuals who were debtors or co-borrowers in a Chapter 13 bankruptcy case at the time their mortgage was placed into forbearance.
Compensation Distribution
As stated on the settlement website, the initial $69 million of the $185 million settlement will be distributed equally and automatically among class members. Co-borrowers will be considered a single class member and will receive one automatic payment, with each co-borrower entitled to an additional $83.33. The website indicates that no action is required to receive the automatic payment or any additional payments for co-borrowers.
Claim Process and Deadlines
Please visit this page to update your address and choose your preferred payment method. You will need to provide the unique ID found in the settlement notice you received by mail or email. If you have lost or did not receive your notice, please reach out to the settlement administrator using the contact information provided here. Class members who experienced damages as a result of Wells Fargo’s forbearance practices—such as delays in refinancing, increased borrowing costs, or denied or postponed credit applications—are eligible to submit a claim form for additional compensation. To file a claim form online, please visit this page and input your unique ID.
The deadline for submitting a claim form is January 10, 2025. Payments for valid claims submitted on time will be distributed only after the settlement receives final court approval and any appeals are resolved in favor of the agreement. A final approval hearing is set for December 10, 2024. The original class action lawsuit against Wells Fargo indicates that in 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which granted homeowners the right to request temporary forbearance on their mortgage loans. The lawsuit claims that Wells Fargo automatically placed hundreds of thousands of mortgage loans in its servicing portfolio into forbearance without prior notification to the affected borrowers. The filing contends that this action negatively impacted borrowers’ credit while benefiting Wells Fargo financially.
