The Law Office of Jason Ostendorf filed a lawsuit against Wells Fargo Bank, N.A. last week for $4,000,000 on behalf of a Maryland married couple. The lawsuit charges Wells Fargo with “using unfair and deceptive trade practices by making false statements of material fact in connection with a loan modification application.” The lawsuit further alleges that “Wells Fargo has failed to honor its obligation to provide a loan modification to which the [homeowners] are entitled.”
The plaintiffs are church pastors who reside in Prince George’s County, Maryland. The lawsuit alleges that Wells Fargo “promised the [homeowners] that it would ‘process [their] request for Loan Modification [sic]’, if the [homeowners] submitted documentation” of their financial hardship. The lawsuit goes on to allege that the homeowners faxed and re-faxed the requested documentation to Wells Fargo, and that the documentation showed that the homeowners were entitled to a modification.
Nevertheless, the lawsuit alleges that Wells Fargo only “pretend[ed]” to work with the homeowners, because it “never intended to keep its promises”. Instead, Wells Fargo, as the lawsuit alleges, gave the homeowners the “mortgage go-around”, because Wells Fargo wanted only to pursue “revenue through collection of late fees and penalties at a foreclosure sale.”
“Wells Fargo never intended to work with these folks”, stated Jason Ostendorf, the homeowners’ attorney. “It just wanted to lead them into a false state of comfort, while in reality it layed the groundwork for a foreclosure, so it could sell the home and use the proceeds to reimburse itself for late fees and penalties.”
News organizations, such as the New York Times, have reported on the banking practice of denying loan modifications in order to seek “lucrative fees on delinquent loans.” For instance, the U.S. Treasury’s latest “Making Home Affordable Report” suggests that this motive applies to Wells Fargo in particular. The report shows that Wells Fargo has provided only 9,761 HAMP trial modifications, out of the 110,807 it is presently required to provide. This means that Wells Fargo currently complies with its legal obligations under HAMP less than 10% of the time.
The lawsuit was filed in the Circuit Court for Prince George’s County, Maryland.