SAN FRANCISCO — Wells Fargo must defend itself against a class-action lawsuit brought by homeowners who accuse the banking giant of failing to modify mortgages that the residents sought to change amid the foreclosure crisis unleashed by the Great Recession, attorneys said Tuesday. The plaintiffs in the case believe that Wells Fargo did not keep the promises it had made to homeowners in terms of modifying the terms and conditions of their mortgages. San Francisco-based Wells Fargo and numerous other big banks have come under fire because the financial titans received a federal bailout to stabilize the banking system at the height of the financial crisis. The banks also received economic incentives from the federal government to modify residential loans under the Home Affordable Mortgage Program, known as HAMP. “Wells Fargo brought a whole bunch of people into the HAMP system, knowing that they would not be able to complete the process,” said Tim Blood, a managing partner with San Diego-based Blood Hurst & O’Reardon, a law firm representing the class of plaintiffs in the legal action. “The bank knew that all those loans wouldn’t be handled in time.” Frequently, the HAMP process took so long that the homes often went into foreclosure and were sold at auction, with no resolution, leaving the homeowners with no place to live. The judge’s ruling certified as a class only plaintiffs from California, not the entire United States. “This ruling in no way addresses any of the underlying issues in the cases,” said Mariana Phipps, a Wells Fargo spokeswoman. She didn’t elaborate. Numerous homeowners contacted this newspaper during the recession to complain that an array of banks, including Wells Fargo, Chase and Bank of America, were forcing them into a bureaucratic maze in their attempt to modify their loans. A number of those homeowners lost their houses to foreclosures. “The proposed class consists largely of financially distressed people — people who have been having trouble making their mortgage payments,” U.S. District Court Judge Vince Chhabria wrote in his court order to establish the class. “It is likely that the large majority of these people would be unable to pursue a claim of any sort if required to proceed on their own.” Contact George Avalos at 408-859-5167. Follow him at Twitter.com/georgeavalos.
A US judge has ruled that Wells Fargo must face a class action lawsuit brought by homeowners in California who claim the bank failed to modify mortgages that the residents sought to change amid the foreclosure crisis unleashed by the recession. Tim Blood, who is representing the plaintiffs, said the bank "knew that all those loans wouldn't be handled in time".