Wells Fargo & Co. reached a $50 million settlement this week with homeowners who alleged that the bank marked up home appraisal fees for borrowers who defaulted on their residential loans.
Under the terms of the settlement, which is still subject to a judge’s approval, San Francisco-based Wells Fargo will be required to automatically mail checks to more than 250,000 mortgage holders.
The plaintiffs won’t need to fill out a claim form or provide any documentation to get compensated, according to law firm Baron & Budd, which represented the homeowners.
The case focused on broker price opinions, which are informal home appraisals done by real estate brokers when borrowers default on residential loans.
Plaintiffs alleged that although their mortgage agreements allowed Wells Fargo to pass along the costs of obtaining these appraisals from third-party real estate brokers, the bank charged homeowners more than it paid for the appraisals. The plaintiffs’ racketeering claim was certified as a class action.
Wells Fargo believes its practices related to broker price opinion were “proper” and disagrees with the claims in the suit but agreed to settle to avoid further litigation, bank spokesman Tom Goyda said in a statement.
The settlement comes as Wells Fargo faces increased scrutiny from lawmakers over a separate issue: revelations that bank employees created as many as 2 million accounts in customers’ names without those customers’ knowledge or consent.
Regionally, Wells Fargo Insurance, part of Wells Fargo & Co., named Mike Taylor senior vice president and managing director for its local operations. Based in Seattle, he reports to Tim Prichard, executive vice president of Wells Fargo Insurance.
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