Wells Fargo has revealed a computer glitch is behind an error that led to more than 500 customers losing their homes.
Last month the bank announced that an underwriting error had caused it to incorrectly reject some 870 home loan modifications, resulting in the bank foreclosing 545 homes.
The errors have left the banking community, legislators and, of course, the affected homeowners asking how this happened.
Jose Aguilar’s home in upstate New York went into foreclosure three years ago after the family found mold in the house and attempted to modify their loan to lower their monthly payment.
Speaking to CBS, Aguilar said: ‘At first they told me: “OK, you know, you might be able to qualify for a loan modification.”‘
However, the process dragged along for months as Aguilar waited for a decision.
‘Then the whole process just started all over again. And then it got to the point we were a year behind,’ Aguilar said.
Wells Fargo ultimately turned down the modification.
‘At that point I just gave up,’ Aguilar said, adding that he and his wife split up as the house went into foreclosure.
Because of the damage done to his credit during the ordeal, Aguilar couldn’t find anyone who would rent to him.
‘At that point my son and I had to move to the basement of a friend’s house and we stayed there for three months, and we had nothing. We had a couch and my son had a bed,’ Aguilar said as he fought back tears.
Nearly three years later in September, Aguilar got a letter from Wells Fargo that read: ‘We made a mistake… we’re sorry.’
The letter claimed that the decision on Aguilar’s loan modification was based ‘on a faulty calculation’ and that it ‘should have been’ approved.
“It’s just like, are you serious? Are you kidding me?’ Aguilar asked.
‘Like they destroyed my kids’ life and my life, and now you want me to – “We’re sorry?”‘
Wells Fargo revealed the same ‘calculation error’ affected 870 customers over an eight year period. Those customers were either denied loan modifications or ‘were not offered a modification in cases where they would have otherwise qualified’.
About 545 of those affected – including Aguilar – lost their homes to foreclosure.
Some of those people’s apology letters came with a check from Wells Fargo. Augilar received one for $25,000.
However, his attorney Marc Dann argues that it doesn’t begin to cover his client’s total losses.
‘So how do you think they came up with the amounts of money that they handed out to people?’ CBS correspondent Anna Werner asked Dann.
‘That’s what we want to find out. We want to find out what went wrong, how it went wrong,’ Dann said.
Wells Fargo refused to disclose how much money it expects to pay out in remediation to affected customers, but said it plans to work with each of those customers to reach a resolution – even offering no-cost mediation.
Aguilar said that for him, money isn’t the point.
‘I want Wells Fargo to know that there’s people out there with feelings and families that try hard to pay their bills and survive. We’re real people, we’re not just money,’ Aguilar said.
Non-profit groups and legislators are probing for more answers about how the glitch came about and how it could be prevented in the future.
Alys Cohen of the National Consumer Law Center told CBS: ‘The question is, how did this happen? Aren’t they supposed to check their computer programs regularly to make sure they’re accurate?
‘This is clearly more than just a simple computer mistake.’
The apology letter Wells Fargo sent to Aguilar in September is pictured with details redacted