Homeowners in California may potentially benefit from a $56.85 million settlement as a result of a lawsuit against Wells Fargo. This legal action was initiated due to allegations that the bank violated a federal statute.
Reflect back to March 2020, a time when the global pandemic triggered widespread lockdowns and caused many individuals to face financial uncertainty. During this period, options such as mortgage or student loan forbearances were available to Americans.
Practical Law provides insight into the CARES Act forbearance, which was a temporary measure mandated by the federal government. It allowed borrowers with government-backed loans to pause or reduce their mortgage payments due to financial hardships related to COVID-19 without facing penalties or needing to repay the missed amounts immediately.
The lawsuit claims that Wells Fargo inaccurately reported these forbearances, thus breaching the Fair Credit Reporting Act.
Now embroiled in a legal dispute, Wells Fargo has opted to settle the case without admitting any fault, as reported by Top Class Actions.
The settlement awaits court approval, with a final hearing scheduled for April 17. Those eligible must have had a Wells Fargo mortgage on a California property and their account must have been ‘current’ when they received a forbearance starting on or after March 27, 2020. Incorrect reporting by Wells Fargo to credit bureaus is also a factor for eligibility.
It remains uncertain how much each individual affected by the class action will receive.
Approval in court is still pending, and the $56.85 million will be divided among eligible claimants. The precise amount depends on the number of qualifying participants and the deduction of legal and administrative expenses.
Eligible individuals do not need to take any action to receive their portion of the settlement. Be cautious of any messages suggesting otherwise.
According to the CARES Litigation Act, inclusion in the settlement is automatic, and a payment from the Settlement Fund will be issued without any required paperwork.
Once the payment check is dispatched, it must be cashed within 90 days. Those who wish to opt out of the settlement must file an objection by March 25, possibly due to disagreements with the terms of the settlement.