Wells Fargo has resolved another of its legal problems, agreeing to pay a $250 million fine for failing to establish an effective home lending loss mitigation program.
In a consent order, the Office of the Comptroller of the Currency said the deficiencies in the program constituted “reckless unsafe or unsound practices” and violated a 2018 agreement that required Wells Fargo to maintain a satisfactory compliance risk management program.
“Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank. This is unacceptable,” Acting Comptroller of the Currency Michael J. Hsu said Thursday in a news release.
In addition to the $250 million civil penalty, the banking regulator is placing restrictions on Wells Fargo “until existing problems in mortgage servicing are adequately addressed.”
As CNN reports, “Wells Fargo has struggled to get its house in order after a series of scandals erupted five years ago. Since fall 2016, the bank has admitted to forcing customers to pay unnecessary fees and opening millions of fake accounts in what the Federal Reserve has described as ‘widespread customer abuse.’”
In the 2018 case, Well Fargo agreed to create a new risk management plan and form an independent committee to evaluate its progress. The consent order addressed misconduct related to mortgage and auto loans, among other violations.
The OCC said the deficiencies in the loan mitigation program “caused errors in the bank’s loss mitigation processes and controls that negatively affected borrowers,” caused the bank to fail to “timely detect, prevent, and quantify inaccurate loan modification decisions,” and “impaired the bank’s ability to fully and timely remediate harmed customers.”
“While the bank has taken steps to comply with the 2018 order and is committed to addressing the remaining requirements in the order, the bank has failed to fully and timely implement effective and sustainable corrective actions required by the order,” the OCC said.
Wells Fargo CEO Charlie Scharf said that “Building an appropriate risk and control infrastructure has been and remains Wells Fargo’s top priority. The OCC’s actions today point to work we must continue to do to address significant, longstanding deficiencies.”