Notification errors to homeowners in bankruptcy cost one bank

On behalf of Bankruptcy Law Firm of Clare Casas on Thursday, November 12, 2015.

There is some good news for certain homeowners in bankruptcy who owe mortgage payments to Wells Fargo Bank, and Florida residents might like to know the story that led the company to agree to pay $81.6 million to homeowners. Under a rule that was enacted in December 2011, those in Chapter 13 bankruptcy must receive at least 21 days notice before an adjustment to their mortgage payment takes places. Wells Fargo is paying the amount to settle claims after failing to abide by that federal bankruptcy law.

The federal rule regarding notification was established to help accurately account for debtors’ costs in bankruptcy, and the company admitted to not filing more than 100,000 notices of payment changes within the time limit. The total violations spanned nearly 68,000 accounts, and more than 18,000 escrow analyses from Wells Fargo also did not meet the required deadlines.

More than 42,000 homeowners who did not receive prompt notices when their rates increased will get a portion of $53.6 million with the average payment to these homeowners being $1,254. Another $10 million from the settlement amount is for compensating the homeowners who are still owed after the earlier payout, and as much as 20 percent of the 42,000 homeowners are estimated to receive another payout. The remaining amount is for those who did not get escrow analyses on time and those who made larger payments than necessary.

Those who feel burdened by debts and harassed by creditors have options that can end wage garnishment or stop repossession efforts. Chapter 13 bankruptcy may give one more control and allow one to better handle a repayment schedule, and it could be possible to keep one’s house when filing for this type of bankruptcy. An attorney can outline the eligibility and other requirements associated with this form of consumer debt relief.