Amid allegations that Wells Fargo scammed borrowers who extended mortgage rate lock periods, the embattled bank said that it will refund those who believe they were wronged.
The $1.9 trillion-asset bank announced the customer refund plan on Wednesday. Wells Fargo plans to contact all home lending customers who paid fees for rate lock extensions between Sept. 16, 2013, and Feb. 28, 2017, and to refund any who believe they should not have paid the charges. The announcement included an acknowledgment that some customers were improperly charged.
“We want to serve our customers as they would expect to be served, and are initiating these refunds as part of our ongoing efforts to rebuild trust,” CEO Tim Sloan said in a press release.
A rate lock enables a borrower to get a mortgage at a specified interest rate for a discrete period of time, often 30 to 90 days. If the loan does not close within that window, the borrower might be charged an additional fee to extend the rate lock.
The fees are commonly charged when the borrower is responsible for the delay. But in August, a homebuyer sued Wells Fargo, alleging that borrowers were charged the fee even when rate locks expired because of the bank’s own processing delays.
The lawsuit, which is seeking class action status, is among the latest headaches for the scandal-plagued Wells.
In Wednesday’s press release, Wells Fargo said that it conducted an internal review, which found that its rate lock extension policy was not always applied consistently. The company implemented changes on March 1, 2017, that are intended to ensure greater consistency.
Wells Fargo charged $98 million in rate lock extension fees to roughly 110,000 borrowers during the three-and-a-half-year period in question. The San Francisco bank said Wednesday that some of those fees were appropriately charged. It also stated that some of the fees were never paid, and others have already been refunded.