Wells Fargo Faces Mortgage Lending Violations Class Action Lawsuit
April 14 2014
Los Angeles, CA: Wells Fargo Bank NA is facing a potential consumer banking and lending violations class action lawsuit alleging it violated California consumer laws by billing late fees to, or foreclosing on, state homeowners who had loan modification applications pending with the bank.The lawsuit, Garcia et al. v. Wells Fargo Bank NA et al., case number 8:14-cv-00558, in U.S. District Court for the Central District of California,alleges Wells Fargo practices “dual tracking”, which is when a bank pursues a foreclosure while simultaneously processing loan modifications. On January 1, 2013, the California Homeowner Bill of Rights was enacted, forbidding this behaviour.
“Because the dual-tracking system prevents homeowners from being evaluated for appropriate loan modifications before foreclosure, it has resulted in many unnecessary foreclosures,” the lawsuit states.
Lead plaintiffs, Orange County residents Henry and Renee Garcia, allege they applied for a loan modification with Wells Fargo but that the bank charged them $840 in late fees and prepared to foreclose on the property before the application process was complete. The bank later rejected the application, verbally denied their appeal, and scheduled the home for trustee sale.
According to the lawsuit, the Garcias defaulted on the mortgage for their San Juan Capistrano, CA, home on March 6, 2013. The following month they submitted a loan modification application to Wells Fargo and over the next several months they stayed in frequent communication with bank officials.
However, simultaneous to the processing of the Garcias’ application Wells Fargo recorded a notice of trustee sale on their home, moving forward with the foreclosure process in violation of the state’s consumer protection law, according to the lawsuit. It wasn’t until the following January that the Garcias loan application was denied, according to the complaint. Garcias appealed, but the bank denied the appeal in February and scheduled a trustee sale of the property for March 5, 2014.
In their lawsuit, the Garcias seek to establish two classes: one for alleged victims of dual tracking and another for homeowners who were illegally charged late fees.
The complaint alleges violations of the California Homeowner Bill of Rights' restrictions on dual tracking and late fees and the California Unfair Competition Law. The plaintiffs are seeking class certification, unspecified damages and restitution, and injunctive relief forbidding the bank from engaging in the alleged activity.
The Garcias are represented by Vincent D. Howard and Gregory H.D. Alumit of Howard Law PC and David M. Arbogast of Arbogast Bowen LLP.
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