U.S. Bancorp and Wells Fargo performed the worst for struggling U.S. mortgage borrowers at the height of the COVID-19 pandemic, according to a new analysis published Tuesday by an advocacy group for front-line bank employees.
The Committee for Better Banks examined consumer complaints and mortgage policies at a dozen large U.S. banks, and faulted them for wrongs such as posting inconsistent policies and withholding important refinancing information.
The new analysis follows up on a July report in which the Committee for Better Banks awarded a below-average grade to most of a baker’s dozen of the country’s largest banks regarding their Main Street lending policies, consumer and worker protections and charitable contributions during the pandemic. The committee, a coalition of bank workers, consumer advocacy groups and labor organizations, subsequently launched a petition of demands based on those findings that has garnered close to 740 signatures.
With its latest report, the organization’s Better Banks Accountability Project dug deeper into the specific issue of mortgage forbearance following the enactment and eventual expiration of consumer relief provisions under the Coronavirus Aid, Relief, and Economic Security Act, arguing that the payment suspensions have been “misunderstood, poorly implemented and a source of stress for both bank workers and customers.”
The share of loans in forbearance fell last week to 6.93%, according to the Mortgage Bankers Association, its lowest level in five months. But 3.5 million homeowners are still in such plans, and a slowing job market recovery appears to be driving more forbearance among certain borrowers.
Two-thirds of the 12 banks included in the committee’s new analysis failed to state that they offered deferred payments and loan modifications, in addition to forbearance, the committee said. Another eight were the subject of customer complaints to the Consumer Financial Protection Bureau taking issue with required lump-sum balloon payments at the end of forbearance windows.
The committee also found consumer complaints to the CFPB alleging that Wells Fargo, Bank of America and U.S. Bank didn’t inform customers that they wouldn’t be able to refinance their mortgages after being placed in forbearance.
Additionally, it noted complaints to the bureau saying that HSBC and Wells Fargo placed customers in forbearance without their authorization. The latter bank drew ire over that issue in July from U.S. lawmakers including Sen. Elizabeth Warren, D-Mass.
Wells Fargo spokesman Tom Goyda told Fastinform that his bank continues to offer payment suspensions of up to a year to mortgage and home equity customers who request them.
“In most cases, customers who were current on their monthly mortgage or home equity payments when a forbearance started and are ready to resume those payments will have the option to move missed payments to the end of the existing loan term,” he said. “Customers who need a reduced payment can be reviewed for a mortgage modification, which will adjust the loan terms based on required guidelines.”
Neither HSBC nor U.S. Bank responded to a request for comment.
Wells Fargo, meanwhile, was recognized by the committee, along with Fifth Third Bancorp, Bank of America, Citigroup and Santander Bank, for being “the only banks with explicit public policies extending a moratorium on evictions and foreclosures.”
“Ceasing home mortgage foreclosures, and offering payment extensions, hardship modifications and fee waivers were just some of the actions we have taken — and continue to take — to support individuals, families and small businesses throughout the pandemic,” Santander spokesperson Laurie W. Kight said in a statement provided to Fastinform.
The CFPB complaints reflected in the report were submitted from March 25 through Aug. 13. President Donald Trump signed the CARES Act into law March 27.
Organizations involved in the Committee for Better Banks include Make the Road New York, New York Communities for Change, Minnesotans for a Fair Economy, Missourians Organizing for Reform and Empowerment, Jobs With Justice and local affiliates, the Communications Workers of America, and UNI Global Union.