Wells Fargo accused of unapproved mortgage plan alterations
US bank Wells Fargo has been accused of making unauthorised adjustments to the mortgage payment plans of homeowners at risk of bankruptcy, significantly increasing the duration of payments and adding thousands of dollars to borrowers' debts, according to recently filed lawsuits. It is alleged that Wells Fargo had started the practice in 2015, around the same time the bank secretly opened hundreds of bank and credit card accounts in a scandal which later cost the firm $185m and CEO John G. Stumpf his job.

Even as Wells Fargo was reeling from a major scandal in its consumer bank last year, officials in the company’s mortgage business were putting through unauthorized changes to home loans held by customers in bankruptcy, a new class action and other lawsuits contend.

The changes, which surprised the customers, typically lowered their monthly loan payments, which would seem to benefit borrowers, particularly those in bankruptcy. But deep in the details was this fact: Wells Fargo’s changes would extend the terms of borrowers’ loans by decades, meaning they would have monthly payments for far longer and would ultimately owe the bank much more.

Any change to a payment plan for a person in bankruptcy is subject to approval by the court and the other parties involved. But Wells Fargo put through big changes to the home loans without such approval, according to the lawsuits.

The changes are part of a trial loan modification process from Wells Fargo. But they put borrowers in bankruptcy at risk of defaulting on the commitments they have made to the courts, and could make them vulnerable to foreclosure in the future.