Wells Fargo Says Hundreds of Customers Lost Homes After Computer Glitch (cnn.com) 168
Hundreds of people had their homes foreclosed on after software used by Wells Fargo incorrectly denied them mortgage modifications. From a report: The embattled bank revealed the issue in a regulatory filing this week and said it has set aside $8 million to compensate customers affected by the glitch. [...] Wells Fargo said the computer error affected "certain accounts" that were undergoing the foreclosure process between April 2010 and October 2015, when the issue was corrected. About 625 customers were incorrectly denied a loan modification or were not offered one even though they were qualified, according to the filing. In about 400 cases, the customers were ultimately foreclosed upon.
Can Wells Fargo do anything _right_? (Score:5, Insightful)
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Close. Citi agreed to buy only the cash and easily converted to cash parts of wachovia. That left the government holding all the crappy baggage. The government asked WF to take the whole mess and WF agreed.
"Asked". "Agreed".
Maybe they were eager to do this, and maybe they were made an offer they couldn't refuse. I rather doubt there was time enough to do anything resembling the due diligence needed when buying such a dumpster fire.
When regulators fail, the answer is always more regulation.
That makes as much sense as taxing imports, and then subsidizing an industry that exports because it was hurt by the obvious inevitable effects of the import taxes.
Nobody would be silly enough to do that.
Re: Can Wells Fargo do anything _right_? (Score:3)
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What does that have to do with Wells Fargo needing or not needing a bailout? Did you respond to the wrong post?
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Yes, it's incidental to the discussion.
No, the trolls shouldn't be allowed to get away with those bullshit representations.
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The more I read about them and from very good sources, the more I'm amazed that they aren't in a 6X12' cell some place for a long time because that's where they belong. While this one may be an honest mistake, they have some seriously bad karma going on.
bug?? or did some people fix it to make there numb (Score:2)
bug?? or did some people fix it to make there numbers look better?
So odd that the "glitch" always favors the bank (Score:5, Insightful)
Almost like it's intentional.....
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Wasn't with Wells Fargo, but did try to use the modification program. We did everything right, stayed current on payments. Qualified financially. The bank threw every road block they could at us. "Lost" paperwork multiple times. Denied receiving paperwork, then tried to deny receiving the second attempt. I actually recorded the conversation with the rep confirming it. That piece was magically found, but they continued to stall. Registered mail would some how takes weeks to be acknowledged. In the end, we d
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Fuck banks. $3 overdraft turned into $300 within 4 days with recurring DAILY fees. I told them they would never see a penny from me. they sent to collections, collections called. i explained what happened with the bank and that i still had all the documents. I told them to clear the debt and it better not show up on my credit or i would sue. they closed the account and apologized. I was 19. I will NEVER deposit a penny into a bank as long as i have control of my money. I hear tell credit unions are the way
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That happened to me with Wells Fargo. Part of it was my insurance company kept resubmitting the payment. I was about 30 cents short, got hit with the overdraft fee and had the payment denied. Within a week I was at -200.
I had a job a few weeks later, brought my paycheck to WellsFargo. They insisted on putting a two week freeze on it. I took my paycheck back and went to Security Service Federal Credit Union and never had a problem like that again.
WellsFargo had bought the bank I had been with and was th
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Mine happened through a debit card purchase on a Wells Fargo account that wasn't supposed to even be able to overdraw. I feel their execs should be shot in public, but in the knees and left to bleed out in the street.
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Yep. Check out your local credit union.
When I was in college, I had an account with one. Student fees were auto-debited from my account, and the college business office accidentally chose my savings account rather than checking account. Then proceeded to hammer it every hour for the money for two days before the credit union called me and was like, "Um, you need to tell them to stop." Note that the college didn't bother to let me know.
I straightened it out with the college, went to the credit union, and eac
8 million? (Score:5, Insightful)
"hundreds" of affected home owners, assume minimum 200. That's just $40k each.
Comment removed (Score:5, Insightful)
Incompetence, not conspiracy (Score:5, Insightful)
Banks hate foreclosures.
It costs them money to administer, creates lots of bad will, and they rarely get all their money back anyway.
Much better if the customer pulls through, pays lots of interest, and eventually takes out a second mortgage.
But how is the computer overriding people? A foreclosure is a big event, handled by moderately senior people, not bank tellers. These people would have reviewed the situation. And yet, Computer Says NO.
How did they become so bureaucratic that a crappy computer program written by some enterprise IT department can automatically override the judgement of human experts dealing with individual cases.
That is the real story here.
Re: Incompetence, not conspiracy (Score:2, Insightful)
Banker insiders fucking love foreclosures. It might take a pittance of bank time to administer a foreclosure up front, but they stand to make magnitudes more on the back end, when schlomo buys the distressed property for 75 cents in the dollar, finances improvements, and flips it for 50% profit.
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The bank only sees that money if the person who buys the house with the 50% profit uses the same bank.
You are missing out on a key detail here, though. Most people trash and destroy their house when the bank forecloses on them. That's one of the reasons they are resold so cheap. I heard about all these "great deals" on houses when I was in the market during the housing crash. Bar none, those houses would have cost a fortune to repair.
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Certainly some incompetence. Banks were not prepared for the foreclosure crisis. However, my personal experience with ours was blatantly adversarial. They lied, stalled and lied some more. Most got bail outs to get them through the crisis, with the idea that they would pay it forward and help American home owners get through it. What they did was screw their customers and continue to give out huge bonuses to execs. In our situation, we had never missed a payment. My wife lost her job and we just couldn't se
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Why not both? (Score:2)
You're assuming Wells Fargo is a well-run bank with competent bankers; the evidence suggests otherwise.
My guess is that they focused a bit too much on the 'pays lots of interest' to remember that modifications can help ensure they get their money back in the first place...and then didn't want to own up to the glitch existing and not being noticed and/or fixed for so long.
So, basically? My guess is that it's the kind of conspiracy that happens when you've got a bunch of people who are just competent enough
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The humans got lazy. They saw the computer was doing their job for them and just went with it.
This always happens. Look at cars with auto-steering, people quickly decide they don't really need to pay attention any more and that's /their lives/ on the line, let alone some anonymous bank customer's financial ruin.
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Banks hate foreclosures.
It costs them money to administer, creates lots of bad will, and they rarely get all their money back anyway.
Much better if the customer pulls through, pays lots of interest, and eventually takes out a second mortgage.
But how is the computer overriding people? A foreclosure is a big event, handled by moderately senior people, not bank tellers. These people would have reviewed the situation. And yet, Computer Says NO.
How did they become so bureaucratic that a crappy computer program written by some enterprise IT department can automatically override the judgement of human experts dealing with individual cases.
That is the real story here.
Posting AC to preserve moderation.
Banks LOVE foreclosures! They get the property AND the money you've paid in interest so far! The vast majority of the time it's incredibly profitable. And when housing prices and interest rates are climbing, people who default soon after their ARM triggers are a fucking gold mine. They just paid the bank rent all that time, and the bank gets to sell the property again.
The only time it's not profitable is when the administration costs and possible court costs exceed the
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Reminds me of any given cashier who gives me the deer-in-the-headlights gaze when I give them an extra penny to make an even amount of change.... they look at me then look back at the computer readout.... A sort of panic welling up behind their screen-addicted eyes as their thoughts scramble toward basic math...
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In which case you use the magic words, "walk away" and they'll fall all over themselves trying to get you that modified loan.
Voice of experience.
Re: They were already being foreclosed on. (Score:1)
I was not late on my mortgage payments. WF actually removed 4 payments I made to throw my home in foreclosure. Glitch ... no! They tried to right out steal my house.
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$8 mil / 400 people = $20,000 per forclosure (Score:5, Insightful)
Not enough. Add a zero. The emotional toll of foreclosure on a family is much worse than the financial toll.
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Not enough. Add a zero.
That depends on the situation:
Was this a bank policy, based on a business decision such as "we're ahead for our stockholders by taking less interest and avoiding foreclosure on these loans", "keeping our loan customers in their houses is good for business or other company goals (even "being nice") or the like? Was this error in implementation inadvertent and non-discirminatory on "suspect categories" like race, religion, national origin, or neighborhood WITHIN THE SET OF PEOPLE TO WH
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Add three or four zeroes and they can serve as an example for others.
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Now don't be silly. The 8 million for the 400 people is the after lawyer fees. The original settlement was 8 billion.
Wells Fargo is full of shit (Score:5, Interesting)
Wells Fargo is full of shit. It was assuredly not a "computer glitch" which made those people lose their homes; it was the fact that Wells Fargo didn't want to deal with people who hit economic hard times and could not pay their mortgages every month. It's well known that, during the foreclosure crisis of the early 2010s, banks made it as difficult as they could for people to change the terms of their mortgages, because the banks could make more money foreclosing and selling the houses.
Re:Wells Fargo is full of shit (Score:5, Informative)
The reason they are doing it now is because they are raked through the coals for this kind of abuse:
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Re: Wells Fargo is full of shit (Score:5, Interesting)
It's shocking.
There were stories at the time of people who contested a foreclosure, pointing out that the bank didn't have the right to foreclose, but judges could not believe that the banks would engage in such corrupt acts, so ruled in favour of the banks.
I wonder if those judges have ever had second thoughts about their decisions, which resulted in taking away people's houses, based on possibly fraudulent statements by banks?
Re: Wells Fargo is full of shit (Score:5, Insightful)
I wonder if those judges have ever had second thoughts about their decisions, which resulted in taking away people's houses, based on possibly fraudulent statements by banks?
I'm not an attorney, but I have quite a few good friends who are attorneys. I can answer that for you. For most if not all - nope. They don't care if their decision screwed people over. One of the really bad things about attorneys in the USA is that there is a belief that goes with the job that the system is always right, even when the outcomes are wrong. Some crazy guy sues you unjustly and you have to wipe out your money to defend yourself from it? Lawyers would tell you that the system works. They don't care if it's abused as long as they get paid. And the number one dirty secret of the legal profession is that lawyers always get paid no matter what. In fact, cops will go out of their way to do all kinds of things to help lawyers get paid. If you owe a lawyer money and it goes unpaid long enough, cops are happy to show up at your door and start taking your stuff to sell to get money or to start seizing your paychecks. If someone owes you a big amount of money and won't pay it, good luck trying to get someone (judge, police) to care enough to do anything about it. Maybe they will, maybe they won't. But they always make sure that lawyers get paid. I have a friend whose wife went a little crazy and she divorced him. She quit her job to make sure she had no income coming in and hired one of her city's highest priced bulldog female divorce lawyers to represent her. Didn't pay a dime to the lawyer but ran up over $30,000 in legal fees. Her lawyer sued the husband for the entire cost and a sympathetic judge made him pay it. This is why I say that lawyers always get paid. Think about it - a lawyer took a case knowing her client wouldn't pay her because she also knew the system would let her collect from the estranged husband. So no, I can assure you that the vast majority of the judges, if not every single one of them, don't care at all.
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One-way street (Score:5, Insightful)
It's funny how these large-scale "computer glitches" seem to favor the bank and not the consumer.
They lost homes, and now Wells Fargo is required to pay them each $20,000. If Wells Fargo accidentally put money into my account, do you think they'd settle for me returning dimes on the dollar?
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Re: One-way street (Score:5, Informative)
That's not what happened. I can't believe we're barely a decade past the financial cataclysm of 2007-08 and even after stacks of books have been written, a dozen ore more documentaries and a couple of blockbuster hollywood films (one that won an oscar), we still have people who don't understand what happened with the housing crash, and why the blame is not on the borrowers any more than you would blame the victim of a violent mugging.
The amount of document fraud perpetrated by Wells Fargo and their secondary-mortgage customers and servicers was just unbelievable. I recommend some of the investigative journalism of an economist and former bank executive named "Yves Smith", who writes the Naked Capitalism blog. Without her work, even these meager attempts at holding the banks accountable would not have been possible. Her book, ECONNED is taught in schools now.
Re: One-way street (Score:2)
Re: One-way street (Score:5, Insightful)
Even worse than that. It wasn't purely a "change in circumstances". Real estate brokers and banks were intentionally colluding to drive up real estate prices to non-sustainable prices (housing bubble) and often times selling people on variable rate mortgages. The banks jacked the rates, the housing bubble crashed. No one could move for a job because they couldn't sell their house. Because they couldn't move they had no way to get a new job if they lost their old one. Then when they forclosed on the homes that they cheated people out of, they wouldn't resell them, instead sitting on them waiting for the market to go up, destroying the value of all the other homes in the neighborhood with a glut of vacant homes. Then the government made us bail them out, so they gave themselves bonuses. All they did is destroy the middle class and the upperwardly moving lower class.
You can find the wreckage still in many cities in America. You drive through a city like Flint Michigan, you can see homes all collapsing. Someone who didn't know better might wonder why people wouldn't take care of your house. But how are you going to replace a roof when the new roof costs more than the entire house. Maybe more than all the houses on your block.
At the time people wanted those senior bank managers lynched. A decade later their ravages of the middle class are still around, but there are those that were protected, neighborhoods that weren't affected, adults that were too young to remember. But it's sad. These people destroyed many more lives than 400. Let me tell you, it's hard to move. It's hard to move when it's not your choice. But when you watch your children losing their home, that's something you could never forgive.
Personally I'd consider bankrupting America as something akin to treason.The idea that they give someone 20k for stealing their home, that's an incredible insult not just from the bank but also by America.
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Except for the fact that very few people that were not in the financial industry, or had someone in it advising them, even knew the market was going to take a horrible downturn in some areas. Yes, some of these houses were overpriced due to the collusion between banks and mortgages brokers, but some of them were not. Problem is they took advantage of the situation when a few people lost their homes because of a bad downturn in the economy. When they started hanging on to vacant homes and abusing the situ
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My experience is that we were current on payments, but my wife lost her job and we needed to either sell the house and move, or get an adjustment from the bank. At that time, no one was buying houses, no one was hiring. We were proactive and contacted the bank, whom told us they couldn't do anything for us until we had missed 3 payments. After three months, we got a foreclosure notice with thousands of dollars in late/lawyer fees slapped on it. We were trying to do the right thing, so we'd put the payments
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It's funny how these large-scale "computer glitches" seem to favor the bank and not the consumer.
Banking is a carefully balanced equation and any unbalance will always seem to favour the banks in some way. Only recently I read stories of glitches that had the opposite effect of the one described here, approved refinancing and mortgages rather than preventing them.
Guess who lost their houses: The people who then couldn't pay for the newly financed loans.
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In this case, it did affect the bank a lot more than the consumer. If you default on your home, you do not keep paying it off. The bank then owns it and has to sell it off for a pittance, often the previous owners will destroy the home as they go out as well and in many cases the houses sit there forever and the bank has to pay the taxes, utilities (in some climates you have to heat the home for it not to freeze), a security company (otherwise looters rip out all the copper) etc on it.
I purchased a house in
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The bank then owns it and has to sell it off for a pittance
Now you're getting to the crux of the financial crisis. See, it wasn't the banks that had to "sell it off for a pittance", it was the secondary mortgage holder, who had bought the mortgage bundled with other mortgages, then insured that bundle via credit default swaps. The banks lost nothing when the house was "sold for a pittance". And since the house's price had been inflated in a bubble caused by this mortgage "pump and dump" scheme, don't you
Sorry you lost your home... (Score:1)
Here is $20,000 opps my bad.... less if all 625 customers get a cut...doesn’t seem enough to compensate for all the hassles of loosing a house
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How about "it's about both"?
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>Whatâ(TM)s with the extraneous âoeonâ? Donâ(TM)t you know basic grammar or what âoeforecloseâ means?
And I feel like I'm reading Indonesian...
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What's with the extraneous symbols? Don't you know how to use a proper computer rather than an iPhone? I feel like I'm reading corrupted text files, with random symbols placed in unexpected locations.
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Hard to say this was the sole cause (Score:1)
I think its difficult to say this glitch was the only reason many lost their homes. Many people were so underwater that nobody could really help them. CNN is typically trying to write in facts where they do not exist. The statics were many re writes failed and people lost their homes anyway. Not defending Well Fargo, but clearly CNN is making a sketchy case and assuming a lot.
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The major reason is that walking away was the SMART move when your upside down by 50%.
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In the long term, everybody is dead.
Most places, property is just now approaching it's bubble price, without inflation factored in, so still down about 30%, 10 years later.
By walking away, in many cases the buyer was able to halve his/her bottom line cost. That's real money. Depending on if there was a foreclosure or not, some could cycle back to eligible for a mortgage, in a year.
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Well, only about 625 customers were affected. If CNN was making this worse than it was, i'd think that they talk about thousands, if not tens of thousands of people. But maybe you are right. Who knows? Probably not many people know and the gen pop will never know, because that'sjust how it goes.
Oh, for Pete's sakee. (Score:5, Insightful)
I don't doubt that there was a "computer glitch", but doing what a (do I have to say this?) potentially buggy piece of software tells you to do without question was a business decision.'
Sure, some programmer made a mistake, because programmers like all humans are fallible. But bank management had a totally wrong-headed approach to doing their jobs.
No Justice (Score:3)
Anytime a company gets caught doing something unethical, they always seem to have their scapegoat ready to go.
This scapegoat is more powerful than an entire ARMY of lawyers can ever hope to be.
It's effectively their " Get out of Jail " free card.
Ever notice how:
It's always a " glitch ", " computer error ", " junior programmer " or " hackers ".
It's never, EVER the fault of the company. It's always something else.
No one goes to jail. The penalty is basically a slap on the wrist, the upper level executives are allowed to leave with
their golden parachutes and the whole thing quietly fades away to a memory mostly forgotten a few years later.
It's a sad, sad state of affairs really.
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Using Code as a Weapon against Consumers (Score:2)
2012 - Racism - charging various shades of brown people higher interest automagically
h
Re:Would Rust have prevented this? (Score:4, Insightful)
Re:Would Rust have prevented this? (Score:5, Informative)
Re: Would Rust have prevented this? (Score:5, Funny)
In Soviet America. bank rob you.
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No. No amount of babysitting, handholding, or mindreading by a software compiler will fix the basic failure here of "garbage in, garbage out".
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Not even a blockchain?
Nope, not a buffer overflow (Score:3)
Nope, rhis isn't a buffer overflow, which doesn't happen in Rust, Perl, PHP, JavaScript, C++, or most other languages.
Rust fanbois touting that is like if Ford touted having a spare tire like it's a big deal. Few languages have bugger overflows. Like most languages, Rust doesn't - just like most cars come with a spare tire.
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Hah, hah, hah. You actually think this was a "bug" and not designed that way? LOL!
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I doubt this was a true glitch, but rather a programming error, that could have been caught with a complete test suite.