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 saabira.chaudhuri@wsj.com
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