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Tuesday, August 23, 2016

Wells Fargo to pay $4.1 million to settle charges of illegal student loan practices

Wells Fargo to pay homeowners $3.45 million over mailing error The Wells Fargo bank branch is seen in Golden, Colorado in an October 11, 2013 file photo. REUTERS/Rick Wilking/Files The Wells Fargo bank branch is seen in Golden, Colorado in an October 11, 2013 file photo. REUTERS/Rick Wilking/Files By Suzanne Barlyn A Wells Fargo & Co mortgage unit will pay $3.45 million to some customers because of a processing error that delayed the mailing of letters to almost 8,000 homeowners in bankruptcy and shortened their notice period about changes to monthly mortgage payment amounts, according to a court document. The unit, called Wells Fargo Bank NA, agreed on the sum in a pact with the Department of Justice's U.S. Trustee Program, which oversees the country's bankruptcy system, according to a letter from the bank filed in U.S. Bankruptcy Court in Greenbelt, Maryland. Wells Fargo agreed to fix the mailing error and give credits and refunds worth $3.45 million to affected homeowners. Inquiries by an independent compliance monitor hired by the bank as part of an $81.6 million settlement with the Justice Department last year uncovered the problem, said Cliff White, director of the U.S. Trustee Program's executive office, in a statement. [L1N13025Y] In that agreement last year, Wells Fargo settled claims that it denied thousands of homeowners a chance to challenge mortgage payment increases imposed during their bankruptcy proceedings. The latest $3.45 million deal reached with Wells Fargo supplements that settlement, the U.S. Trustee Program said. The bank also has agreed to expanded compliance monitoring. A Wells Fargo spokesman said it self-reported the mailing delay to the U.S. Trustee Program upon learning of the problem and that it is providing timely delivery of documents. (Reporting by Suzanne Barlyn; Editing by Bill Rigby) ================================ CFPB’s Arbitration Proposal Draws 13,000 Comments Flood of comments indicates consumer agency faces tough time completing regulation By Yuka Hayashi Aug. 23, 2016 4:12 p.m. ET WASHINGTON—The Consumer Financial Protection Bureau was flooded with nearly 13,000 public comments on its proposed rule to restrict the use of arbitration clauses in consumer financial contracts, indicating a rough road ahead for completing the contentious regulation. Hours before the public comment period ended late Monday, letters of support and opposition were sent in by leading groups vying to ======================== Money | Mon Aug 22, 2016 3:33pm EDT The sign outside the Wells Fargo & Co. bank in downtown Denver April 13, 2016. REUTERS/Rick Wilking The sign outside the Wells Fargo & Co. bank in downtown Denver April 13, 2016. REUTERS/Rick Wilking By Suzanne Barlyn A Wells Fargo & Co unit will pay $4.1 million to settle allegations that it engaged in illegal private student loan servicing practices that unfairly penalized certain borrowers, the Consumer Finance Protection Bureau (CFPB) said on Monday. The bureau said it identified breakdowns throughout Wells Fargo's servicing process, including failing to provide important payment information to consumers, charging illegal fees and failing to update inaccurate credit report information. Wells neither admitted nor denied the charges, the bureau said. The settlement resolves three areas of concern related to "procedures that were retired or improved many years ago, and addresses the impact to a small number of customers," a Wells Fargo spokesman said. The procedures at issue were either retired or corrected between 2011 and 2013. The $4.1 million sum includes a $3.6 million penalty to the bureau and a $410,000 fund for borrowers. Last year, the CFPB found that more than 8 million U.S. borrowers are in default on more than $110 billion in student loans. Breakdowns in student loan servicing may be driving the problem, the bureau said. Student loans make up the second largest U.S. consumer debt market with roughly $1.3 trillion owed by borrowers who took out federal and private loans, the bureau said. Also In Money U.S. appeals court declines to reconsider Bank of America ruling U.S. banks want to cut branches, but customers keep coming From the Olympics to Wall Street: The athletes who become brokers Bonnie Baha, DoubleLine's director of global credit, dies Loans from private lenders are a small fraction of that amount, totaling about $100 billion owed. But they are often used by borrowers with high debt levels who also have federal loans, the CFPB said. The bureau said the bank processed payments in a way that made consumers pay more fees. If a borrower's payment was not enough to cover the total amount due for all loans in an account, the bank divided that payment among the loans in a way that maximized late fees rather than satisfying payments for some of the loans, the bureau said. Wells Fargo's Sioux Falls, South Dakota-based education finance unit services about 1.3 million U.S. consumers, the CFPB said. (Reporting by Suzanne Barlyn; Editing by Alan Crosby, Bernard Orr)

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