Wells Fargo apparently had more than one way to cheat customers who were refinancing their homes.
The scandal-plagued bankâ€™s Beverly Hills, Calif., branch routinely talked clients into paying higher interest rates in order to avoid fees for delays in processing mortgage-refinancing deals, a whistleblower told The Post.
Thatâ€™s despite the fact that Wells Fargoâ€™s understaffed team of loan officers at the Beverly Hills office were usually responsible for the processing delays, according to Frank Chavez, a former loan officer who has blown the whistle on other questionable tactics at the nationâ€™s third-biggest bank.
The latest accusation comes to light less than a week after a federal class-action suit accused the beleaguered bank of delaying mortgage loans and refinancings â€” and then tricking customers into paying extension, or â€œrate lock,â€� fees in order to keep their agreed-upon interest rate.
As an alternative to those fees, which could easily surpass $1,000 for a $400,000 home, loan officers frequently suggested bumping up the mortgage rate by as much as a quarter of a percentage point â€” a hike which, over the long run, could cost customers far more.
â€œIt sucked for everybody except the managers, who were looking good because they were keeping their expenses down,â€� Chavez told The Post.
The scheme was widespread until late 2015, when it was being used for â€œthe vast majority of these loans,â€� Chavez said. The tactics were unlikely to have been isolated to the busy office, which could clear over $1 billion a year in new mortgages, he added.
The accusations, which havenâ€™t been previously reported, are the latest revelation that the San Francisco-based lender, now led by CEO Tim Sloan, went to extraordinary lengths, including angering some of its wealthiest customers, to pad its bottom line.
When clients confronted with fees complained that they werenâ€™t at fault for a delayed refi, loan officers typically went to their managers for permission to cover the cost of extending a rate lock â€” and were typically denied.
Instead, Wells loan officers were given permission to strike another deal: Charge a slightly higher interest rate in exchange for a â€œcreditâ€� to cover the rate-lock extension fee.
â€œYouâ€™d make the borrower suck it up,â€� Chavez said, noting that customers who refused were typically faced with another home appraisal that could cost $500 alone. â€�Itâ€™s either that or walk, and borrowers donâ€™t want to go through with this all over again at Bank of America.â€�
â€œIt is common practice across the industry for customers to select â€” at application or later in the process â€” some combination of interest rate and points based on their individual circumstances and preferences,â€� Tom Goyda, a bank spokesman, told The Post.
â€œWe continue to work through a comprehensive review of our past practices regarding rate-lock extensions and will address additional steps for our customers as appropriate,â€� he said.
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