Wells Fargo & Co. has agreed to pay $50 million to settle a racketeering lawsuit accusing it of overcharging hundreds of thousands of homeowners for appraisals ordered after they defaulted on their mortgage loans, Reuters reports.
The proposed settlement, which requires court approval, was disclosed in a filing in an Oakland, California, federal court. If approved, it will resolve nationwide claims that Wells Fargo charged much more than it paid for third-party appraisals, exploiting borrowers who could least afford it and driving them further into default.
Wells Fargo’s settlement of the lawsuit comes as the bank is still recoiling from a scandal over sales targets that drove employees to create unauthorized accounts for customers. Multiple lawsuits over those practices are pending.
Spokesman Tom Goyda says Wells Fargo believes its appraisal practices were proper and disagreed with the lawsuit’s claims but settled to avoid further litigation.
On the flip side, plaintiffs’ lawyer Roland Tellis says: “We’re very pleased to have negotiated a settlement that achieves our litigation goals.” About 250,000 homeowners are covered by the proposed deal, he says.
Mortgage agreements allow banks to charge homeowners for the appraisals if they default on their mortgage loans, but Wells Fargo added large mark-ups to the amounts its third-party vendors charged, the 2012 lawsuit alleged.
