Sarah Mirando  |  March 26, 2013

Category: Legal News

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Judge Denies Calif. Wells Fargo Mortgage Class Action Settlement

By Kimberly Mirando

 

Wells Fargo Mortgage

UPDATE 4/19/13: Judge Spero preliminarily approves California Wells Fargo Mortgage Class Action Lawsuit Settlement on third try.


A federal judge on Friday refused to approve a proposed class action lawsuit settlement between Wells Fargo Bank and delinquent California mortgage holders who say they were tricked into believing they could delay foreclosures by making payments.

Wells Fargo announced the class action settlement in January, which will resolve claims the bank sent special forbearance letters to certain borrowers who were behind in payments promising that Wells Fargo would modify their loans if they sent in six more loan payments. Plaintiffs allege Wells Fargo didn’t always follow through on this promise and that its forbearance-to-modification program was merely a ruse to get money from delinquent customers.

U.S. Magistrate Judge Joseph Spero told attorneys he needed more information about the proposed class action lawsuit settlement, which would provide $500,000 to a class of 28,000 homeowners, in order to determine if it is fair for each claimant.

First, Judge Spero said he needed to know how many Class Members are likely to make claims for the Wells Fargo foreclosure settlement, which is capped at $500,000 under California’s Rosenthal Fair Debt Collections Act. If the number of claims is high, he said, the recovery for each claimant could be far less than what their actual losses were.

“Obviously, it’s one kind of case if the [$500,000] is being paid to 25,000 people, and another if it’s paid to 1,000 people,” Judge Spero said.

Spero also told attorneys they needed to reword the Class Notice to clearly define which Class Members are eligible to sue Wells Fargo for the true value of the equity they lost.

“Assuming the [settlement] numbers are something like we talked about early on, certainly $5,000 or less, we’re not talking about the kind of recovery for someone who has a claim that could be worth 10 times that,” he said.

As of now the class is defined as California homeowners who received the forbearance agreement offer, made all required payments to Wells Fargo, but did not receive the promised loan modifications between March 12, 2009 and October 31, 2012.

The California Wells Fargo Mortgage Class Action Lawsuit Settlement case is Gustavo Reyes et al. v. Wells Fargo Bank NA, Case No, 10-cv-01667, U.S. District Court for the Northern District of California.

The plaintiffs are represented by Steve W. Berman and Thomas E. Loeser of Hagens Berman Sobol Shapiro LLP, by Peter B. Fredman of the Law Office Peter Fredman and by David Pivtorak of the Law Office of David Pivtorak.


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Updated April 19th, 2013

 

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2 thoughts onJudge Denies Calif. Wells Fargo Mortgage Class Action Settlement

  1. David nyquist says:

    This was my situation in a nutshell filled out forms and registered mail back to Wells Fargo. Haven’t heard or seen a thing$? Can someone help me please?

  2. Penny Hall says:

    Is this only for CA home owners? Does it affect AZ class action suit, which was supposed to be funded by the middle of April 2013

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