Wells Fargo announced plans to refund borrowers who wrongly paid fees for mortgage rate lock extensions requested from Sept. 16, 2013, through Feb. 28, 2017.
The plans to refund mortgage borrowers came out Tuesday as the U.S. Senate Committee on Banking, Housing and Urban Affairs grilled Wells Fargo CEO Tim Sloan over the its massive fake account scandal last year.
During the hearing, Sloan mentioned the plans to refund borrowers amid continued claims that Wells Fargo is committed to make things right.
More than a year ago, it came out that the company opened as many as 2 million credit card and bank accounts without authorization. The bank would later find the number was actually 3.5 million.
And after the account scandal broke, investigations into the bank uncovered damaging news against the company that went beyond the accounts, including mortgages.
Wells Fargo announced the details of the refund on Wednesday, saying it plans to reach out to all home lending customers who paid fees for mortgage rate lock extensions requested over the nearly four year period.
While Sloan mentioned the plans on Tuesday, Well Fargo noted that the company previously disclosed that it was reviewing past policies and procedures regarding the circumstances in which mortgage rate lock extension fees were assessed to customers.
Approximately $98 million in rate lock extension fees were assessed to about 110,000 borrowers during the period.
But, the company said that it believes a substantial number of those fees were appropriately charged under its policy.
As a result, the amount ultimately refunded likely will be lower, as not all of the fees assessed were actually paid and some fees already have been refunded.
For added explanation, a rate lock means that a borrower’s interest rate won’t change between the offer and closing, as long as they close within the specified time frame and there are no changes to their application.
Following an internal review, Wells Fargo determined a rate lock extension policy implemented in September 2013 was, at times, not consistently applied, resulting in some borrowers being charged fees in cases where the company was primarily responsible for the delays that made the extensions necessary in the first place.
Effective March 1, 2017, Wells Fargo said it changed how the company manages the mortgage rate lock extension process to ensure more consistency by establishing a centralized review team that reviews all rate lock extension requests for consistent application of policy.
The first customer communications and refunds are projected to go out in the final quarter of this year.
“We want to serve our customers as they would expect to be served, and are initiating these refunds as part of our ongoing efforts to rebuild trust,” said Sloan.
