A class action lawsuit filed today accuses Wells Fargo of fraud, claiming the bank froze millions of dollars in home equity loans by falsely claiming that its customers’ home property values had declined significantly.
The suit, which was filed in the Northern District of Illinois, alleges that Wells Fargo unlawfully failed to accurately assess the value of customers’ homes before concluding that there had been a significant decline in property value.
“Even putting aside the fact that what they are doing is illegal, there’s no justification for denying people these secured credit lines in favor of unsecured high-interest credit cards,” said attorney Jay Edelson, whose law firm, KamberEdelson LLC, filed the suit and has previously filed similar class action lawsuits against J.P. Morgan Chase, WAMU and Citibank over their respective HELOC account suspension practices.
“This is the type of greed that lead to taxpayers having to bail out banks like Wells Fargo in the first place,” he said.
The class action suit was filed on behalf of Michael Hickman, 46, of Westmont, Ill., who alleges that the credit limit on his HELOC account was reduced because of a supposed substantial decline in the value of his home.
In reality, the complaint alleges, Hickman’s home and the homes of thousands of other class members did not substantially decline in value; rather, Wells Fargo used a variety of unreliable computer models to produce artificially deflated values.
The suit also alleges that Wells Fargo failed to provide customers with proper notice of the reductions and that the bank improperly required customers to seek reinstatement by paying upfront for their own property appraisals.
Following the reduction of Hickman’s HELOC credit limit, Wells Fargo offered to raise the limit available on one of his higher-interest credit cards.
“In this economy, what Wells Fargo and other lenders are doing to everyday customers like Michael Hickman is simply unconscionable,” Edelson said.
A copy of the federal lawsuit is available at http://www.prnewschannel.com/pdf/wells_fargo_complaint.pdf