Wells Fargo Ordered to Pay $54.8 Million in Class-Action Lawsuit

By Saabira Chaudhuri 

Wells Fargo & Co. has been ordered to pay $54.8 million in damages tied to a class-action lawsuit alleging that fees charged by two mortgage servicers were excessive.

On Friday, a Manhattan federal jury ruled against the San Francisco lender in a suit alleging that late fees charged by now-defunct mortgage firms The Money Store and HomEq were improper and unlawful.

HomEq was owned by Wachovia, which Wells Fargo acquired in 2008. Wachovia subsequently sold HomEq to Barclays PLC in 2006, and Barclays in turn sold the unit to Ocwen Financial Corp. The Money Store was owned by First Union Corp., which merged with Wachovia. First Union closed The Money Store in 2000.

"We disagree with the jury's decision to award damages for some of the claims in this case--all of which are based on allegations dating back 10 years or more at a predecessor company--and we likely will seek review of that portion of the verdict. We are pleased that the jury rejected a significant portion of the plaintiff's claims," said a spokesman for Wells Fargo.

The plaintiffs claimed that The Money Store and HomEq improperly charged late fees after the lenders had accelerated homeowners' mortgage loans, so no further monthly payments were actually due. They alleged that the late fees were prohibited under the terms of the loan agreement.

Write to Saabira Chaudhuri at [e-mail]

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