Wells Fargo has reached an agreement to pay $56.85 million to resolve a class action lawsuit that accused the bank of sending inaccurate reports to credit agencies. The lawsuit claims that during the pandemic, Wells Fargo improperly categorized mortgage accounts as “in forbearance,” while they were actually current according to the guidelines of the CARES Act.
The plaintiffs assert that this misreporting negatively impacted their credit scores, which in turn made it more challenging to secure loans and resulted in increased costs for borrowing. The lawsuit was filed in San Diego Superior Court and specifically addresses California homeowners whose mortgages were legally up-to-date but marked as in forbearance beginning March 27, 2020.
While Wells Fargo has denied any wrongdoing, the settlement fund will automatically compensate class members without the need for paperwork. Checks are expected to be mailed to the last known addresses of the qualifying individuals following final approval in April.
This recent settlement follows a previous $185 million agreement reached by Wells Fargo last year, which addressed allegations that the bank had placed borrowers into forbearance without their explicit consent.
This initiative not only aims to rectify past errors but also underscores the importance of accurate credit reporting in the banking industry, especially during critical times such as the pandemic.