As a result of a $10 million settlement in a class action lawsuit filed in the U.S. District Court of Atlanta, Georgia, Wells Fargo will issue refunds of $175 to approximately 60,000 military members and veterans who refinanced VA loans through Wells Fargo, Wachovia and SouthTrust between January 20, 2004 and October 7, 2010.
At the heart of the lawsuit were allegations that Wells Fargo failed to adhere to VA rules regarding fees that are permitted to be charged to military members and veterans taking out a VA loan. Under VA guidelines, lenders are required to cover all attorneys’ service fees with the exception of title work, and lenders are prohibited from requiring a borrower to pay for said fees.
However, the lawsuit alleged that Wells Fargo encouraged closing attorneys to bundle their fees into title search and title examination fees, thereby charging the borrower for them instead of the lender having to cover the fees as required by the VA rules.
As part of the settlement, Wells Fargo denies any liability, and intends to send letters to those military members and veterans eligible for a refund in late March of 2011, which will include all necessary details in how to apply for and receive the refund.