Wells Fargo Bank sued for fraud

Filed under: Daily News | Tags:, ,

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

4 Responses to Wells Fargo Bank sued for fraud

  1. Finally, someone is making Wells Fargo pay for their greed. As a member of this class action lawsuit, I am very excited to see where this goes. Illegal, unethical and just plain wrong. Welcome to the real world Wells Fargo!

    August 19, 2009 at 12:02 pm

  2. JP Morgan Chase just did the same thing to me. I have a home equity line of credit for my small business and I got the same story. The line was frozen due to a decline in my home value. I live in Colorado Springs CO.

    August 19, 2009 at 2:37 pm

  3. Interesting as USAA just did this to me, unannounced, in June this year. They canceled the balance on my HELOC, not reduced, but canceled, without warning. When I called a bank representative, all I was told “you’ll receive a letter in the mail detailing it (elimination of the HELOC balance) and refused to answer any questions. When I e-mailed earlier this week to inquire on how to challenge USAA’s decision, the response was “you’ll receive a FAQ document in the mail.”

    I’ll be contacting Mr. Edleson for his thoughts on USAA’s actions.

    Ken G.
    August 19, 2009 at 3:23 pm

  4. I had a significant HELOC reduction. Some weeks ago I made multiple inquiries by phone and e-mail to Mr. Edelson, with no response.

    Does Mr. Edelson have too much business? Does anyone know of any other attorneys that have any interest in this?

    Harold R
    September 2, 2009 at 4:54 pm