Subprime Lending News 8/7/17:
Wells Fargo dealt two more legal blows, overdraft fees are up and a West Virginia couple sues for predatory lending.
By Caroline Thompson
Will we ever have a week without multiple Wells Fargo scandals coming out of the woodwork? So far, this doesn’t seem likely. Read on to hear about the bank’s latest antics and today’s other essential subprime news updates.
Wells Fargo fined $108 million for charging veteran borrowers hidden fees.
In yet another legal blow for the embattled bank, Wells Fargo must now pay $108 million to the federal government to settle a lawsuit, which claims the bank secretly charged military veterans hidden fees that are, under a U.S. Department of Veterans Affairs loan guaranty program, not applicable to veteran borrowers. “Wells Fargo made a lot of money passing off charges to the veterans that Wells Fargo was supposed to pay itself,” said James Butler, who is a lawyer for the Georgia mortgage brokers who initially filed the suit in 2006. This is the seventh lawsuit the mortgage brokers have filed against a major bank for this crime, and it’s also their biggest payout so far. In 2012, they secured a combined $161.7 million settlement from Bank of America, Citigroup, First Tennessee, JP Morgan Chase, PNC, and SunTrust.
Americans paid $15 billion in overdraft fees in 2016.
According to a new report from the Consumer Financial Protection Bureau, U.S. banking customers paid a combined total of $15 billion in overdraft fees last year. On average, most banks charge about $34 per overdraft, a fee which can cripple those living paycheck to paycheck. “Consumers living on the edge can find themselves racking up numerous overdraft charges,” said CFPB Director Richard Cordray on a CNN press call last week. “Despite recent regulatory and industry changes, consumers with low account balances and little margin for error continue to pay significant overdraft fees.” The Federal Reserve has, since 2010, been attempting to lesson the burden of overdraft fees by requiring banks to get permission from customers to cover a transaction when they don’t have the funds available in their account. While this has lead to a slight reduction in fees from some banks, Americans are paying more than ever for overdrafts. The $15 billion in 2016 is up 2.2 percent from $11.41 in 2015.
West Virginia couple sues mortgage lender for predatory lending.
Paul and Lisa Smith of Prosperity, West Virginia are suing Real Time Solutions Inc. and US Bank NA for allegedly giving them an illegal and “unconscionable” loan. The Smiths purchased their home in 1999, and say they were pressured by the defendants into taking an excessively high interest loan, and have had issues with the lenders improperly crediting payments over the life of the loan. According to a report from the West Virginia Record, “The plaintiffs request a trial by jury and seek an order declaring that the loan is unenforceable, actual damages, penalties, attorney’s fees, costs and all further relief as the court may deem just and appropriate.”
Judge rules that immigrants denied credit can sue Wells Fargo for damages.
A judge in California has ruled that young immigrants who were denied student loans and credit cards by Wells Fargo are legally allowed to file a class-action lawsuit agains the bank. Under the 2012 Deferred Action for Childhood Arrivals program, immigrants with work permits must have the same access to credit as U.S. citizens. While this ruling is yet another setback for the scandal-laden bank, a representative for Wells Fargo said they are disappointed, but that this “in no way suggests that the claims ultimately will prevail.”