Wells Fargo has placed the executive in charge of its Los Angeles County home-lending operation on leave amid an internal investigation of its mortgage fee practices.
Last month, ProPublica reported that Wells Fargo had improperly charged customers to extend their promised interest rate when their mortgage paperwork was delayed, according to former bank employees. The ex-employees said the delays were usually the bank’s fault but that management forced them to blame the customers. For the customer, the fees could run from $1,000 to $1,500 or more, depending on the size of the loan.
In addition to placing the Los Angeles County regional sales manager, Tom Swanson, on leave, the company is reviewing how it charges customers who need extensions on their mortgage interest rates. Wells Fargo is analyzing mortgage data, reviewing files and conducting interviews to ascertain the seriousness and scope of the problem, according to Tom Goyda, a bank spokesman. Goyda declined to comment on the length of Swanson’s leave, saying it is a confidential personnel matter. Swanson did not respond to a call seeking comment.
Since the story ran, other current and former Wells Fargo employees as well as customers have reached out to ProPublica to say that the practice extended beyond Los Angeles County. For now, the Wells Fargo inquiry is focused only on the Los Angeles area.
“We are looking at the specific claims that have been made first and if in that review there are additional steps we need to take, we will take those as appropriate,” Goyda said. The investigation, he added, is “separate and independent” from the home-lending business to “help ensure that we get to the facts quickly and that the information is evaluated objectively.”
Wells Fargo has been reeling from reputation-damaging scandals. In September, the bank was fined $185 million for illegally opening as many as 2 million deposit and credit card accounts without customers’ knowledge. On Tuesday, Wells said it had fired four senior managers connected with that scandal.
Four former employees say that Wells Fargo made clients in its Los Angeles region pay for missing deadlines to lock in interest rates on loans, even though the delays were the bank’s fault. Read the story.
In Oregon, two former loan officers and one former branch officer said they were instructed to charge customers for mortgage lock extensions even when the bank was responsible. All of them asked not to be named because they still work in the financial industry or hope to return to it. The former branch officer estimated that in 2015 and 2016 he oversaw 350 mortgages that needed lock extensions. He said the bank only paid the fee twice.
“I believed in Wells Fargo. I loved Wells Fargo. But it was just stealing from people,” said the former branch officer.
A former loan officer from the area said, “They would only pay for the lock extension if the loan officer could compose a without-a-doubt-this-is-the-company’s-fault timeline.”
There is an appraiser shortage in the Oregon area, which may contribute to the delays, according to Goyda, the Wells Fargo spokesman. Since securing an appraisal is the responsibility of customers, they need to pay the fee when they miss the rate-lock deadline.
But the former employees said Wells Fargo made it hard for customers to obtain timely appraisals. Few appraisers wanted to work with the bank because it didn’t pay as well as other mortgage lenders and was slower than competitors.
An appraiser in the region bolstered that view. “Wells Fargo paid relatively low appraisal fees, which told me they were most likely getting the least experienced or least in-demand appraisers,” said Beth Aquilizan, a residential appraiser with over two decades of experience in Oregon.
In Orange County, California, a Wells Fargo loan originator, who still works at the bank and requested anonymity, told a similar story. The bank’s back office system is so congested that it cannot process and underwrite loans under the cut-off time, this person said. But the bank pushed loan officers to pass the fees on to customers. This person said, “It’s assumed to be ‘Borrower Paid’ unless there’s a really long, strong story.”