A second nationwide class-action lawsuit has been filed against Wells Fargo for fraudulently putting people into forbearance status on their home mortgage payments without their knowledge, consent, or request under the guise of COVID-related mortgage relief.  The lawsuit seeks remedies for thousands of homeowners who are suffering damages as a result of Wells Fargo’s unauthorized practices.  The suit was filed in the U.S. District Court for the Western District of Virginia, Harrisonburg Division, according to lead attorney Thad Bartholow of Kellett & Bartholow PLLC (Dallas, Texas).  Kellett & Bartholow, along with co-counsel Giles & Lambert, PC (Roanoke, VA), and Abelardo Limon (Brownsville, Texas) filed the lawsuit on July 23, 2020.  The suit is titled Forsburg v. Wells Fargo & Co., et al. , Case No. 5:20-cv-ooo46.

The attorneys for the plaintiff assert that Wells Fargo has placed homeowners into unwanted forbearances across the nation, causing substantial damage to homeowners with Wells Fargo mortgage loans.

A forbearance is a temporary suspension of the borrower’s monthly mortgage payment obligation, offered for a finite time period, after which borrowers must either make arrangements to cure any missed payments or face potential foreclosure if they are unable or unwilling to do so.

In order to be eligible for a forbearance under the CARES Act, borrowers must (a) request forbearance relief, and (b) attest that the borrower is experiencing a financial hardship as a result of the COVID-19 emergency.  The plaintiff in the lawsuit, Gerald Forsburg, denies requesting forbearance of his mortgage payments.

The attorneys allege that Wells Fargo’s imposition of unwanted forbearance status on its borrowers causes numerous harms and damages.  In many cases, Wells Fargo stopped accepting electronic mortgage payments after it placed homeowners into the unwanted forbearances, causing homeowners that were current on their home loans to become delinquent without their knowledge and through no fault of their own.

In addition, once in forbearance, Wells Fargo’s policy is to refuse to grant new credit or loan modifications.   The attorneys for Mr. Forsburg allege that he had completed and signed a loan modification that would have substantially lowered his interest rate and monthly mortgage payment.  However, unbeknownst to Mr. Forsburg, Wells Fargo secretly placed his account into forbearance status and then did not implement the modification.

Wells Fargo also reports the mortgage account as in “forbearance” status to credit reporting agencies.  Mr. Bartholow stated that “as a result of the forbearance status on borrowers’ credit reports, lenders other than Wells Fargo may refuse to grant the homeowners credit, believing that the borrowers have not made their monthly mortgage payments.”  Such borrowers would thus be precluded from obtaining credit at historic low interest rates.

Karen Kellett, another attorney involved in the pending cases, said that “implementing forbearance plans without customer approval reminds all of us of other troubling practices at Wells Fargo in recent years.”

In 2016, the bank was found to have opened millions of accounts that customers hadn’t requested, and a year later, it was sued for forcing auto insurance on auto buyers who didn’t need it.

With respect to the forbearances that Wells Fargo recently imposed on customers that did not ask for or want, Mr. Bartholow stated, “Wells Fargo’s practice is so destructive on so many levels, one of our primary goals is to enjoin Wells Fargo from placing borrowers into CARES Act forbearances when they do not want them and have not requested them.”

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