And Wells Fargo just got slaughtered. A recent ruling out of the Bankruptcy Court of the Eastern District of Louisiana sent one of the most decisive statements that certain judges understand what is going on with the foreclosure mess embroiling this country.
Last week, bankruptcy court judge Elizabeth W. Magner, hit Wells Fargo for costs, sanctions and fees of nearly $300,000.00. She then hit Wells Fargo with punitive damages of $3,100,000.00. Three. Point. One. Million. And this was on one loan.
Essentially what happened is the debtor filed for chapter 13 protection under the bankruptcy code. This is the section where you make payments to your creditors over a certain number of years and keep your property. The debtor filed that plan and made his payments to the Trustee as required. What Wells Fargo did, however, was divert funds they received from the Trustee to fees and charges that were not approved by the Trustee or the Court under the plan. Probably would not have been a huge deal if they had not been hit with sanctions just 4 months earlier in an almost identical case for doing the exact same thing.
This judge was having none of it, calling Wells Fargo’s conduct “reprehensible” and “clandestine”.
Obviously every case is different, but there is certainly more than one way to skin a cat. The irony is Wells Fargo has held themselves out as being above the fray in the whole meltdown. If you are facing foreclosure, or are in bankruptcy, make sure you have counsel who is well versed in foreclosure defense to protect your interests. The courts are starting to get it even if the media continues to refuse to report on it.
Hat Tip, NakedCapitalism.