Wells Fargo (WFC) Friday agreed to pay a $50 million settlement arising out of allegations the bank bilked roughly 250,000 homeowners by padding appraisal fees.
The settlement, which still awaits approval by an Oakland, Calif. court, is centered around alleged appraisal markups the banks charged to homeowners who defaulted on mortgage loans. Homeowners who default are traditionally charged fees for appraisals. But the private lawsuit filed in 2012 suggested Wells Fargo overcharged these homeowners, assessing total fees of $95 to $125, according to the lawsuit. The actual cost for the appraisals is often $30 or less according to National Association of BPO Professionals, which is cited in the lawsuit. The fees were difficult to detect since they were shown as "other charges," the lawsuit says.
This settlement piles on top of other legal issues Wells Fargo is facing following this year's scandal where thousands of bank employees allegedly opened accounts unknown to customers in order to reach sales goals.
Tom Goyda, a spokesman for Wells Fargo, says the bank stands by its procedures and is settling this suit to avoid prolonged litigation. He says the settlement is part of a private class action lawsuit where the payment goes to members of the class but also legal costs and attorney fees. "While we believe our practices related to Broker Price Opinions were proper and disagree with the claims in the lawsuit, we have agreed to settle the matter to avoid further litigation," Goyda told USA TODAY.