Good news for current and former Oregon and Washington Chapter 13 Bankruptcy filers who saw their mortgage payments rise with little or no notice during the pendency of their Chapter 13 Bankruptcy cases. The U.S. Trustee Program has now entered into a national settlement agreement with Wells Fargo Bank which will require the lender to pay out nearly 82 million dollars for repeatedly failing to provide homeowners in bankruptcy with legally required notices. These failures worked to deny homeowners in bankruptcy with the chance to challenge the veracity of mortgage payment increases. The failures violated federal bankruptcy rules that require detailed disclosure requirements of fees and charges.
Under the rules, mortgage lenders must file and serve a notice at least three weeks before revising a Chapter 13 debtor’s monthly mortgage payment. Wells Fargo admits that it failed to timely file more than 100,000 payment change notices and failed to timely perform more than 18,000 escrow analyses in cases involving nearly 68,000 homeowners in bankruptcy. Under the settlement, Wells Fargo also will change internal operations and submit to oversight by an independent compliance reviewer.
This settlement certainly represents a big victory for homeowners in bankruptcy who are entitled to proper and timely notices, particularly when they are being asked to pay more.