Citing a recent investigation by NBC News, two U.S. senators have asked the chief executive of Wells Fargo to answer extensive questions about the bank’s practice of pausing mortgage payments for borrowers without their consent under a federal program designed to help homeowners financially hurt by COVID-19.
The senators, Elizabeth Warren of Massachusetts and Brian Schatz of Hawaii, both Democrats and members of the Senate Banking Committee, wrote a letter on July 29 requesting information and documents about Wells Fargo’s policy of placing customers in so-called forbearance programs they did not request.
The conduct can harm borrowers’ credit reports by showing that they are not making payments even when they are and can prevent them from refinancing their home loans to take advantage of rock-bottom interest rates.
The senators’ letter said the bank “appears to be incapable of self-governance,” and noted that reports of borrowers being placed in forbearance programs they did not want “raise even more questions about the inability of Wells Fargo and its leadership team to comply with the law and the needs of its customers.”
The letter, obtained exclusively by NBC News, was addressed to Charles W. Scharf, Wells Fargo’s relatively new chief executive officer. He has been on the job since last fall; the bank’s two previous chief executives both resigned in the wake of revelations in 2016 that Wells Fargo opened millions of accounts for customers who did not request them.
“Wells Fargo may have gotten a new CEO — but the same-old, badly broken culture that repeatedly scams its customers runs deep,” Warren said in a statement to NBC News. “We want answers on why the bank has been placing nondelinquent borrowers in mortgage forbearance without their consent, especially during one of the worst economic crises in history.”
A Wells Fargo spokeswoman declined to comment on the letter but provided the following statement to NBC News.
“During the early stages of the crisis, we took actions to provide relief to mortgage and home equity customers who we learned were impacted by COVID,” the spokeswoman said.
“Customers placed in forbearance received notices of that action through multiple channels, and we removed them from forbearance upon their request. In the spirit of providing assistance, we may have misinterpreted customers’ intentions in a small number of cases. In those limited cases, we are working directly with customers to ensure they were not harmed in any way.”
Under the CARES Act, which provides help on loans backed by the government-sponsored companies Fannie Mae, Freddie Mac, Ginnie Mae and others, borrowers harmed by COVID-19 can ask to suspend their mortgage payments for up to a year. The amounts they owe during the period are either tacked onto the ends of the loans or paid off before. No additional fees, interest or penalties can accrue on the loans while they are in forbearance.
But in two separate stories published this month, NBC News reported that borrowers in at least 14 states — Alabama, Arizona, California, Florida, Kansas, Louisiana, Michigan, Missouri, New Hampshire, New Jersey, New York, North Carolina, Texas and Virginia — had described being unwittingly placed into forbearance plans by Wells Fargo.
In some cases, borrowers whose mortgage payments were paused by the bank said they had clicked on COVID-related pages on its website or requested information about assistance programs, but had never signed up. Some said they continued to make their payments to the bank.
“I click this button and next thing I know, I’m getting a thing that says I’m deferred and I can’t reverse something I didn’t even want,” Tammi Wilson, a Wells Fargo customer, told NBC News.
In recent years, Wells Fargo, the nation’s fourth-largest bank, has come under pressure for opening unrequested bank and credit card accounts for clients. It also forced others to buy auto insurance they didn’t need and, in some cases, weren’t told about.
The July 29 letter asks that Wells Fargo detail how many borrowers it placed in forbearance who did not request it. The letter also asked what actions the bank has taken to compensate borrowers for any damage its actions have caused and whether Wells Fargo has worked to correct the information it provided to consumer credit agencies about the forbearance programs it had placed customers in against their wishes.
The letter also asked if Wells Fargo was compensated for the forbearance activities and, if so, how much.
The senators gave the bank until Aug. 12 to respond to their information request.