Wells Fargo WON'T Halt Foreclosures Despite Evidence That Servicers Didn't Read Paperwork
WASHINGTON — Wells Fargo & Co. does not plan to halt foreclosures despite an employee's testimony that she signed up to 500 foreclosure documents daily without reading them.
The employee of the San Francisco-based bank said in a deposition taken last March that she signed between 300 and 500 foreclosure documents per day, verifying only her name and title.
Such practices have been called into question by attorneys general in 50 states. They have accused mortgage companies of violating state laws.
Wells has not halted foreclosures and says it has discovered no problems in the legal documents used to process them. The company said earlier in the week that it would review pending foreclosures for potential defects.
"Our records show that Wells Fargo's foreclosure affidavits are accurate," said company spokeswoman Vickee Adams. When the company finds employees that don't follow procedure, it takes "corrective action." She declined to comment on whether the Fort Mill, S.C.-based employee, Xee Moua, still works for Wells.
The deposition of the Wells Fargo employee, obtained by the Associated Press, was reported earlier by the Financial Times. It's the second piece of testimony that suggests Wells engaged in similar practices that have led other banks to halt foreclosures.
In another deposition taken in May, a Wells employee named Herman John Kennerty said he verified only the dates on up to 150 foreclosure documents he signed daily and relied on co-workers to ensure that other information in the documents was correct.
Other companies including Ally Financial Inc.'s GMAC Mortgage unit, Bank of America Corp. and JPMorgan Chase & Co. have halted tens of thousands of foreclosures after similar practices became public.
The growing questions about foreclosure documents could cause thousands of homeowners to contest foreclosures that are in the works or completed. But analysts say most homeowners facing foreclosure are still likely to lose their homes.
Shares of major banks fell Thursday as investors worried about the cost of mounting problems that could cost big banks billions. Shares of Wells fell 4.2 percent to close at $24.72, while shares of Bank of America fell 5.2 percent and shares of Citigroup Inc. fell 4.5 percent.
Investors fear that banks will pay dearly for mishandling foreclosure paperwork. JPMorgan said Wednesday that it set aside $1.3 billion in the third quarter to cover legal expenses, including for the foreclosure problem.
In a conference call after its earnings announcement, JPMorgan CEO Jamie Dimon said the final price tag will depend on how soon banks can return to a normal foreclosure schedule.
The company also said would extend its review of its foreclosure cases to 41 states – doubling the number of its cases under review to 115,000. JPMorgan had previously said it was halting foreclosures in the 23 states where foreclosures must be approved by a judge.
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AP Business Writer Daniel Wagner contributed to this report from Washington.
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ALAN ZIBEL 10/14/10 07:01 PM ET Associated Press