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DannLaw asks state courts to force Wells Fargo to disclose information related to software glitch that caused hundreds of borrowers to lose homes

In the News

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Wells Fargo

DannLaw attorneys representing clients who lost their homes due to a Wells Fargo’s computer “glitch” will ask judges in three states to compel the scandal-laden bank to turn over documents related to the error. The Petitions for Discovery will be filed in Fayette County Court in Kentucky, in Syracuse, New York, and in Hamilton, Ohio.

“We suspected from the moment Wells announced the mistake had been made and concealed for years that they weren’t telling the truth about what happened or how many people were affected,” DannLaw founder and former Ohio Attorney General Marc Dann said. “Those suspicions were confirmed when calls and emails from people who believed they had been victimized by the bank began pouring into our office hours after we posted an item about the incident on our social media platforms.”

Dann’s doubts about Wells’ veracity were further validated on November 7 when the giant bank admitted that a glitch in the software tool it used to calculate loan modifications affected hundreds more homeowners than the firm admitted in August of this year. “Given Wells’ propensity for scamming and cheating consumers, it’s hard to take anything they say at face value,” he said.

Dann noted that his firm is being forced to file the motions for discovery because Wells repeatedly refused to provide information about the mistake that caused hundreds of borrowers, including DannLaw’s clients, to lose their homes to foreclosure. “We filed requests for information under the provisions of the Real Estate Sales Practices Act (RESPA),” he said. “Wells ignored those requests, so our only alternative is to ask state court judges to order the company to comply with the law.”

In the petitions DannLaw says it is seeking information about the problematic mortgage loan underwriting tool, the calculation error that caused hundreds of people to be denied loan modifications for which they qualified, the process used to determine which borrowers would receive settlement offers from the bank, documents related to the application for loan mitigation filed by DannLaw’s clients. The firm also argues that courts need to compel discovery because Wells has refused to agree to preserve relevant documents.

“Quite frankly, given Wells’ track record, we wouldn’t be surprised if the documents we’re seeking disappeared into thin air,” Dann said.

“We’re not engaged in a fishing expedition,” Atty. Brian Flick explained. “The letters our clients received from Wells notifying them that they had been unjustly denied loan modifications makes it clear to us that they have a number of claims against the bank. But we can’t file those claims unless and until Wells provides the information we need to proceed. Both federal and state laws require them to provide that information. They won’t, so we’re doing what we need to do to seek and secure justice for our clients.”

Background

In August of 2018 Wells Fargo disclosed that a “glitch” in its mortgage loan underwriting software caused the company to deny loan modifications to hundreds of borrowers, 400 of whom eventually lost their homes to foreclosure. Although the bank began unjustly denying modifications in 2010, it hid the problem for nearly eight years. On November 7 Wells revealed that hundreds more homeowners had been impacted by the error.

For more information, please contact Atty. Marc Dann at 216-373-0539.

Access a copy of the Petition for Discovery here.

About DannLaw

DannLaw, founded and managed by former Ohio Attorney General Marc Dann, is one of the nation’s leading consumer/mortgage lending/disability rights law firms. DannLaw maintains offices in Cleveland, Columbus, and Cincinnati, Ohio, Chicago, Illinois, and Newark, New Jersey.

Along with helping clients pursue claims under a wide range of consumer and disability rights laws, the firm’s attorneys are among the few in the nation who regularly use the federal Real Estate Sales Practices Act and the Truth in Lending Act to hold mortgage servicers, big banks, debt collectors, and others entities in the financial services industry accountable for abusing, scamming, and cheating borrowers. To date DannLaw has secured millions of dollars in compensation for victims of financial fraud and helped thousands of people save their homes from foreclosure.

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DannLaw attorneys suspect troubled bank has understated number of victims, urges Wells borrowers who received loan modifications between 2010 and 2015 to seek legal advice.

Earlier this year Wells Fargo revealed in an SEC filing that a “software glitch” caused the bank to improperly deny mortgage loan modifications to 625 homeowners between 2010 and 2015. At the time, Wells said it had set aside eight million dollars to compensate borrowers impacted by the mistake, including the 400 families who lost their homes to foreclosure.  Now victims of the incident are receiving checks from Wells. Attorney Marc Dann, founder and managing partner of DannLaw, is urging them to seek legal advice before accepting the money.

“A number of borrowers who received checks from Wells have contacted us to ask if the amount being offered is fair,” Atty. Dann said. “Obviously, families who went through the trauma of losing or almost losing their homes due to Wells’ incompetence deserve more than a few thousand bucks—especially if the company violated federal lending laws and rules. We’ve launched an investigation to determine if that’s true.  No one should cash a check they receive from the company or sign a settlement agreement until our inquiry is complete.”

That investigation is likely to reveal Wells has understated the number of people damaged by the glitch. “Company officials admit 625 borrowers were improperly denied modifications,” Atty. Dann noted. “But that’s only part of the story. The same software error may have caused loan mods that were granted to be miscalculated. As a result, thousands of homeowners may be making payments that are much higher than they should be.”

“Wells has no intention of telling them about the problem, so we’re making a concerted effort to alert anyone whose mortgage was modified by Wells Fargo between 2010 and 2015 that they may have been cheated,” he said noting that borrowers with “conventional” loans owned by Fannie Mae or Freddie Mac comprise the pool of potential victims.

“Talking to those folks will enable us to assess whether and to what extent Wells violated lending laws and regs, including the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA)” Atty. Dann explained. “If we discover the law has been violated, borrowers could receive thousands of dollars in compensation from Wells whether they are a member of the group of 625 homeowners the bank admits to abusing or someone whose loan mod was miscalculated. In either case, we’re able and eager to take legal steps that will hold Wells accountable for its actions and make victims whole.”

Borrowers who receive a compensation/settlement check from Wells, as well as those who received a loan modification from the bank between 2010 and 2015, may call 877-475-8100 to arrange a free consultation with DannLaw.

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Mortgage Reinstatement

What are Mortgage Reinstatements and Loan Modifications

When you fall behind on your mortgage payments, the best way to avoid foreclosure is to pay the arrears, or the amount you owe your lender. There are two ways to bring your payments up to date so you can stay in your home.

Mortgage Reinstatement

If you have the funds needed to immediately resolve the past due balance you may apply for a mortgage reinstatement.

To begin the mortgage reinstatement process you must contact your lender, Bank of America, Wells Fargo, etc., and ask them to provide a quote listing the exact amount you must pay to become current on your mortgage payments. The quote should include:

  • All missed payments and current payments due
  • Any late fees
  • The cost of property inspection, if applicable
  • If a foreclosure is underway, any fees related to that process that must be paid
  • If a sheriff sale is scheduled, the fee required for cancellation

The quote must be paid in full for the reinstatement to be valid.

Loan Modification

If you, like many people facing foreclosure, do not have the funds needed to pay all your arrears at once you may apply for a loan modification, which will enable you to resume making payments and take care of your past due balance over time. This option is preferable to paying thousands of dollars to bring your loan up to date only to find yourself on the brink of foreclosure again because your existing mortgage loan is unaffordable.

A loan modification or a short sale may lower your monthly payments, make your housing costs more affordable, and create the opportunity for you to stay in your home as you pay your arrears.

Contact DannLaw Regarding Mortgage Reinstatement

If you want to apply for a mortgage reinstatement or loan modification the foreclosure defense attorneys at DannLaw are here to help. We’ll use our years of experience and extensive knowledge about the foreclosure process to draft a strategy for resolving your situation. Contact us today to schedule a free consultation.

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Last year, Edwardo Sanchez, a paralegal in DannLaw’s New Jersey and New York office became the first person in his family to graduate from college, an event he proudly shared on Twitter. His tweet was noticed and retweeted by none other than Bill Gates who told his 43.2 million followers that Edwardo’s story was an “amazing moment of hope and progress” in what had been a “really tough year.” I agree with Mr. Gates, Edwardo’s achievement gives us all hope that the American Dream is still alive.

Like Mr. Gates I also believe 2017 was a really rough year – and I’m afraid it may have been the first in an epoch during which it will become increasingly difficult for people to realize their dreams whether they involve graduating from college, buying a home, living in a safe neighborhood with good schools, achieving financial security, participating in the democratic process, realizing their full potential as human beings, or enjoying their retirement years. All those things are now at risk because the current administration is rolling back regulations and refusing to enforce laws that ensure Edwardo and other Americans have the opportunity to use their talents to achieve and succeed.

I’ll readily admit I was depressed about the situation until I realized that there was one group in the country that could step in and assume the responsibilities government was abdicating – lawyers. That’s right, lawyers like me, like my colleagues at DannLaw, like the thousands of lawyers across the country who do one thing in many different ways – help clients achieve their dreams.

When you think about it, we lawyers have always been in the hope and progress business. We’ve always been there when the government failed to protect its citizens. Lawyers were at the forefront of the civil rights movement, the drive to make cars safer, to rid medicine of bad doctors and dangerous drugs, to clean up our air and water, to protect consumers, and advocate for the disabled.

Armed with only JDs, knowledge, guts, and an unwavering belief in the principle of equal justice under law, lawyers made America a better place to live time and time again.

That aspect of our profession has never been more important than it is today.

With that in mind, we at DannLaw are redoubling our efforts to battle the home foreclosure crisis that is still roiling communities across Ohio by using Regulation X of the Real Estate Settlement Protection Act (RESPA) and Regulation Z of the Truth in Lending Act (TILA) to hold lenders and servicers accountable when they ignore the law and abuse borrowers.

Fortunately, these powerful tools managed to escape the fate that has befallen large portions of the nation’s regulatory regime over the past year. Indeed, I’m both happy and astonished to report that Reg. X is stronger than ever thanks to the enactment of additional amendments that became effective in October. Readers can learn more about the new provisions by visiting DannLaw.com or by contacting Dan Solar, leader of our RESPA practice group.

We also plan to do more to help borrowers deal with student loan debt which now exceeds $1.31 trillion and is turning the dream of obtaining a college degree into a nightmare for American families. According to Emily White, director of our student loan practice group, the Department of Education’s decision to relax oversight of the industry has freed lenders to use increasingly aggressive tactics against borrowers. Although people who took out loans backed by the government have few options, we can help students who borrowed from National Collegiate and other private lenders because those companies, like their counterparts in the mortgage industry, often commit sloppy mistakes and paperwork errors that make it difficult if not impossible for them to collect. Emily and I will have more to report during 2018.

Which is a great segue into an area in which we made great progress during 2017 – disability rights law. I’m extremely proud of the work we’ve done to convince companies to bring their digital platforms into compliance with the Americans With Disabilities Act and similar state statutes.

Here’s a special note to my friends who practice corporate defense law and their clients – complying with the ADA is a win/ win. Enabling people with disabilities to purchase goods via your websites and apps will create millions of new customers and generate billions in profits. Don’t take my word for it, just ask Target, the company’s reaped huge profits since becoming a leader in accessibility.

Those are just a few areas where we have and will continue to step in and use the law to do what government won’t – protect and enhance our clients’ ability to achieve their dreams.

Knowing we have the power to do it has made me prouder than ever to be a lawyer.

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Marc Dann - "The Con" Documentary Screenshot

In 2007 then-Ohio Attorney General Marc Dann was among the first officials in the nation to recognize that years of predatory mortgage lending and Wall Street greed was about to devastate the housing market and bring the U.S. economy to the brink of collapse.

Now the filmmakers at Red Point Digital have produced and are preparing to release The Con, a documentary that chronicles the crisis, the people crushed by it, and those like Marc Dann who attempted to stop the economic carnage and hold those responsible for it accountable. Marc plays a prominent role because he, unlike federal officials, actually formed a criminal investigation task force that led to arrests and prosecutions of the scam artists who came close to utterly destroying the American Dream.

You can watch a trailer of The Con by clicking on the pic above. We’ll let you know when the full movie is released.

And just in case you think all is right with the world ten years after the crash, read the following piece about the ongoing foreclosure crisis in Ohio…

“The reports of my death are greatly exaggerated.” American author and humorist Samuel Clemens (Mark Twain) commenting on his supposed demise in 1897.

Unfortunately, the same thing can be said of the supposed demise of the housing crisis that’s cost millions of Americans their homes, savings, and peace of mind. Yes, like everyone else, I’ve seen the stories touting the economic recovery that’s sweeping the nation, but a number of things prevent me from adding my voice to the chorus singing Happy Days are Here Again.

First, there’s my own experience: distressed homeowners contact my firm every day desperately searching for a way to save their homes.. According to media reports, the only thing I should be hearing in my office are crickets, but the opposite is true.

Second, there’s the 2016 presidential election. I normally avoid the temptation—my spouse would call it a compulsion—to be overtly political in these columns, but pundits of all persuasions point to the economy and working class angst as the main reasons Donald Trump won. It’s not a coincidence that the voters who handed him the keys to the Oval Office live in states like Ohio that have been hit hard by a housing crisis that’s supposed to be over.

Except it isn’t, as a new report issued by Attom Data Solutions clearly shows. According to the company’s figures, nearly 20% of Ohio homeowners are underwater, i.e. they owe more than their houses are worth. The numbers are even more depressing when you look at the negative equity statistics city-by-city: Cleveland, 22.9%; Akron, 20.3%; Dayton, 20.3%; Toledo, 20.0%. If that data set isn’t bleak enough for you consider this: Columbus and Cincinnati are among the cities with the fastest rate of growth in underwater mortgages in the nation.

All of which explains why my phones will be ringing incessantly for some time to come.

I have often written about the economic toll the ongoing housing crisis already has and, based on the Attom report, will continue to extract from individuals, families, and entire communities in Ohio and other states. What we don’t talk about often enough is its impact on domestic relations law.

Let me explain…

Fifteen years ago, when I ran a law firm located in a strip plaza just outside Youngstown, Ohio, domestic relations work made up a considerable portion of my practice. Then, fighting over the equity in the marital home often led two people who had once been madly in love to regard each other with disdain that bordered on downright hate. But, in the end, at least one or both parties walked away with some cash and/or a home at the end of the day.

In 2008 the housing market collapsed and the situation changed. Although I had stopped doing domestic work, colleagues who did told me couples regularly engaged in “I don’t want it, you can have it” battles to determine which spouse would be stuck with a residence that was tens of thousands of dollars or more underwater. Divorce and dissolution proceedings ground to a halt as couples struggled to find a way to deal with crushing debt and the consequences of foreclosure. When people mired in this type of situation finally were divorced they ended up homeless and deeply in debt.

Nine years later not much has changed. The stress caused by attempting to bail out a home that’s underwater not only destroys marriages, it forces people who want to separate to stay together, increases the negative financial impact that often accompanies divorce, and makes it even harder for both parties to get on with their lives.

That’s why we readily agree to work with couples and attorneys who call us to help resolve mortgage and negative equity issues. They trust us to act as honest, impartial professionals who know how to delay, defend and deal with the aftermath of foreclosures. Whether we negotiate loan modifications, arrange short sales, ensure that mortgage companies have legal standing to foreclose, or use Regulations X and Z to hold financial institutions accountable when they break the rules, we extricate homeowners from situations that appeared hopeless and put them in a position to build a brighter future for themselves and their families.

That’s what makes foreclosure defense the most satisfying work I’ve done since I graduated law school. But I have to admit that I dream of the day when my phone’s not ringing because that would mean the housing crisis had ended, mortgage lenders and servicers were acting responsibly, and all was right with the world.

I know, it’s not going to happen, but I can dream can’t I? Until then, we at the Dann Law Firm will just keep doing what we do: helping people deal with the ongoing nightmare that is the housing crisis.

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Attorney at Law Magazine, Cleveland Edition - Marc Dann

Anyone who knows Marc Dann: clients, colleagues, opposing counsel, judges, reporters, is well aware of what he does for a living. But only the members of his family and closest friends truly understood why he does what he does.

Until today. That’s because the “Attorney of the Month” article about Marc that appears in the latest edition of Attorney at Law magazine delves into the influences that shaped his remarkable legal career and led him to eschew life as a partner in a “tall building” law firm for an office in a strip plaza with a waiting room overflowing with “regular, working-class people” who needed his help.

The article traces his life in the law from his first job as director of the anti-trust division in the office of the West Virginia AG, through his tenure as a crusading Ohio state senator and attorney general, to his current position: one of the nation’s most successful and innovative consumer protection and foreclosure defense attorneys.

You may access the entire article here. It’s well worth the click…