Wells Fargo has agreed to pay nearly $57 million to settle a class-action lawsuit alleging the bank hurt some mortgagors’ credit scores during the early months of the COVID-19 pandemic.
The proposed settlement, which received preliminary approval from the Superior Court of California in San Diego County on Jan. 9, concerns borrowers who entered COVID-related mortgage forbearance under the bipartisan CARES Act, the massive relief package Congress passed in 2020.
Back then, homeowners with federal government-backed mortgages who faced pandemic-related financial hardship could temporarily pause or reduce payments through forbearance. And if a borrower was up to date on the mortgage before entering forbearance, loan servicers were generally mandated to keep reporting the account loan as “current” to credit bureaus, so the borrower’s credit score would not take a hit.
In this case, however, Wells Fargo is accused of reporting some accounts as “in forbearance” instead of “current,” which the plaintiffs argue could have lowered borrowers’ scores. Wells Fargo is not admitting any wrongdoing as part of the settlement.
According to the settlement website, the class includes people with a Wells Fargo-serviced mortgage on property in California whose loan was “current,” who received a CARES Act forbearance on or after March 27, 2020, and whose account was then reported to a consumer reporting agency as “in forbearance” or something similar.
Eligible borrowers do not need to file a claim to receive payments. If the settlement receives final approval, payments will go out automatically.
Once a check has been sent out with the payment, it must be cashed within 90 days.
The size of each payment has not yet been finalized. It will depend on how many people are included and how much remains after deductions for attorneys’ fees, administration costs, and service awards for the named plaintiffs, with the remainder to be divided equally among class members.
The court has set March 25, 2026, as the deadline for class members to ask to be excluded from the settlement or file objections. A final approval hearing is scheduled for April 17, 2026, when the judge will decide whether to grant final approval and allow payments to move forward.
“We are pleased to have reached a settlement that, once approved by the court, will resolve this matter,” a Wells Fargo spokesperson said in a statement to The Epoch Times.
The settlement comes nearly six years after the CARES Act became law as the federal government tried to mitigate the economic fallout of the pandemic. That $2 trillion package included one-time stimulus checks—up to $1,200 per adult and $500 per child—along with a long list of other relief measures.
