Lawsuit Claims Wells Fargo Unlawfully Demanded Post-Payment Interest on Home Loans
by Erin Shaak
Last Updated on May 8, 2018
Peters v. Wells Fargo Bank, N.A.
Filed: January 18, 2018 ◆§ 4:18cv136
A proposed class action has been filed against Wells Fargo Bank, N.A. that seeks to recover millions of dollars in allegedly unlawful interest payments borrowers made on home loans.
A proposed class action has been filed against Wells Fargo Bank, N.A. that seeks to recover millions of dollars in allegedly unlawful interest payments borrowers made on home loans. The complaint summarizes the supposed practice in the following statements:
“Defendant Wells Fargo Bank, N.A. has a systematic practice of collecting ‘post-payment’ interest on loans insured by the Federal Housing Administration without first complying with the uniform provisions of the promissory notes and the regulations governing these loans. As a result, Wells Fargo has collected tens of millions of dollars in post-payment interest from borrowers in an unlawful and unfair manner, and through this [proposed] class action, [the plaintiff] seeks to recover restitution for those [proposed class members] injured by Wells Fargo and injunctive relief barring this wrongful conduct in the future.”
The suit explains that if borrowers pay off the full principal of their loans on a day other than the first of the month, lenders may collect interest—post-payment interest— through the end of the month, though only if they comply with the FHA’s strict requirements, including supplying each borrower with an FHA-approved form explaining the terms of the post-payment interest.
The plaintiff argues that Wells Fargo uses “its own unauthorized form” that does not fully disclose the borrower’s rights and the terms he or she must adhere to in order to avoid extra charges, meaning the defendant has forfeited its right to collect post-payment interest.
The case, originally filed in August 2017 in California district court, has since been removed to the District Court for the Southern District of Texas.
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