Pick-A-Pay loans allowed borrowers to select from a variety of payment options, though Wachovia didn’t exactly go out of its way to tell customers that the amount owed would increase if the borrower selected the lowest payment amount.
As part of the many settlements surrounding these loans, Wells — which acquired Wachovia in 2009 after that bank collapsed — agreed to hundreds of millions of dollars (possibly billions) in loan adjustments for borrowers with Pick-A-Pay loans.
But the lawyer for the plaintiffs in the new suit claim that, as of Sept. 30, Wells had only granted 1,746 out of 66,000 requested loan mods tied to this settlement.
“Thousands of people have been denied loan modifications — people who, in our opinion, should not have been denied,” the lawyer tells the L.A. Times.
The suit accuses Wells Fargo of breaching the settlement, acting in bad faith and violating a state unfair competition law. Separately, the lawyer has asked the court to order that Wells Fargo stop all foreclosures on related loans pending his investigation.
In a statement, Wells Fargo said it would “immediately and forcefully” defend the new lawsuit, which it said “maligns a very effective consumer loan settlement program.”
Wells, which did not offer the Pick-A-Pay loans, denies the allegations in the suit, telling the Times, “We have provided modifications for nearly 110,000 borrowers with Pick-a-Pay loans and principal reductions of more than $5 billion for those borrowers… That means that more than a third of all Pick-a-Pay loans — including those covered by the settlement and those not included — have been modified since the beginning of 2009.”