Wells Fargo to pay $250M fine for mortgage oversight lapses
Wells Fargo agreed to pay a $250 million fine after the Office of the Comptroller of the Currency (OCC) charged the company with failing to improve oversight of its mortgage business and comply with a 2018 agreement to fix decades of internal lapses.
Under a consent order issued by the OCC, the bank agreed to take several steps to improve risk management and customer protections within its home lending operations, three years after Wells Fargo paid a record-breaking fine for a series of damaging lapses.
Wells Fargo agreed to a consent order in 2018 with the OCC and agreed to pay a $1 billion fine after failing to make promised adjustments to customers’ interest rates on mortgages and automobile loans, and forced millions of auto loan customers to buy unnecessary insurance products. Those lapses cost Wells Fargo customers millions of dollars and in some cases their cars or homes.
“Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank. This is unacceptable,” said acting Comptroller of the Currency Michael J. Hsu in a statement.
The consent order also bans Wells Fargo from transferring any of the mortgages it collects payments on out of its portfolio. It also bars the bank from acquiring the rights to service residential mortgages, with few exceptions, until the OCC is satisfied with its progress.
“The OCC will continue to use all the tools at our disposal, including business restrictions, to ensure that national banks address problems in a timely manner, treat customers fairly, and operate in a safe and sound manner,” the order read.
In a Thursday statement, Wells Fargo CEO Charles Scharf said the OCC order and fine “point to work we must continue to do to address significant, longstanding deficiencies.”
“As I’ve said over the past year, our work to build the right foundation for a company of our size and complexity will not follow a straight line,” he continued. “That said, we believe we’re making significant progress, the work required is clear, and I remain confident in our ability to complete it.”
The OCC’s order is the latest in a historic series of penalties for Wells Fargo, which has paid billions in fines and legal settlements while under unprecedented regulatory restrictions for more than a decade of serious misconduct.
Wells Fargo was fined $100 million by the Consumer Financial Protection Bureau in 2016 for opening millions of bank and credit card accounts for customers without their consent.
Two years later, the Federal Reserve banned Wells Fargo from growing beyond $1.95 trillion in assets following the unauthorized accounts scandal, issues with its mortgage oversight and charging veterans hidden fees on refinancing their home loans. The bank is still operating under that cap after senior leaders repeatedly failed and even ignored demands from Fed officials to take more aggressive action to overhaul its internal controls.
Nearly a dozen top Wells Fargo officials, including Scharf’s two full-time predecessors, were forced out of the bank under pressure from regulators and lawmakers across the political spectrum. Several have also faced civil charges filed by the OCC for failing to keep Wells Fargo in compliance with federal banking laws.