Senators ask Wells Fargo CEO Scharf to explain faltered forbearance policy

by 24USATVAug. 1, 2020, 3 a.m. 17
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• Sens. Elizabeth Warren, D-MA, and Brian Schatz, D-HI, wrote Wells Fargo CEO Charlie Scharf on Wednesday, asking him to provide details by Aug. 12 of what the bank knew regarding reports that it placed customers into forbearance without their knowledge.
• "If these reports are true, they represent one more addition to a long list of inexcusable actions by Wells Fargo at customers' expense," the senators wrote, adding a three-page bulleted inventory of missteps that have embroiled the bank since 2008, including the 2016 fake-accounts scandal that cost the lender a $3 billion fine; an auto insurance scandal that may have contributed to 27,000 repossessions; and monthly checking account service fees a lawmaker last year said were "deceptively collected."
• Warren and Schatz addressed Scharf directly. "You were appointed nearly ten months ago after your two predecessors were dismissed for their incompetence and inability to institute meaningful reforms at the bank. We had hoped that you would bring the needed change to Wells Fargo’s culture following years of false promises and continued scandals, and we were initially encouraged by press reports that indicate that you were undergoing an 'intense review' of the bank's operations and meeting with executives, 'grilling them about the ways they do business,'" they wrote. "But this recent reporting highlights the broken culture at the bank, and the need for Wells Fargo to remain under intense regulatory scrutiny until it is clear that the necessary changes have been made to ensure that the bank is truly committed to its consumers."

In his first quarterly earnings call as CEO of the nation's fourth-largest bank, Scharf in January said the bank had 12 enforcement actions against it, adding that his primary focus was on "advancing our required regulatory work with a different sense of urgency and resolve, while beginning to develop a path to improve our financial results."

"The work is on us at this point," he said.

The Federal Reserve capped the bank's assets at $1.95 trillion in 2018 in response to the bank's scandals.

Regarding the forbearance allegations, Wells Fargo spokesman Tom Goyda told Banking Dive last week, "In the spirit of providing assistance, we may have misinterpreted customers' intentions in a small number of cases.”

Wells Fargo customer Tammi Wilson claims her mortgage was placed in forbearance after she clicked a link to coronavirus relief information on the bank's website and input her contact information to receive related program materials.

Days later, she learned she no longer had an active account when she logged on to make a payment on her loan.

"I click this button and next thing I know, I'm getting a thing that says I'm deferred and I can't reverse something I didn't even want," Wilson told NBC News. "If you're going to help people, there is a super simple first step — just ask, 'Do you need our help?'"

Wilson said she continued to make mortgage payments, and on July 1, the bank sent her a letter confirming her request to opt out. A July 18 credit report, however, shows Wilson’s mortgage is "in forbearance" and that April and May payments weren't credited to her account, according to NBC News.

"The practices described in these reports are eerily similar to previous Wells Fargo scandals," Warren and Schatz wrote Wednesday, adding that the pattern "reveals a broken culture at Wells Fargo, and a bank that appears to be incapable of self-governance."

The senators clarified that they support mortgage servicers helping borrowers who are actually in delinquency.

"If Wells Fargo's actions are indeed isolated to a limited number of instances where there were errors, it is not our intent with this letter to discourage Wells Fargo from providing assistance to borrowers who need and request it," Warren and Schatz said.

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