Baron & Budd and Wells Fargo have reached a $50 million settlement agreement to resolve a case involving hidden fees the company charged to mortgage holders for broker price opinions (BPOs). A BPO is an informal type of appraisal prepared by a third party real estate broker that a lender will typically provide when a residential borrower defaults on a mortgage loan.
What Did Wells Fargo Allegedly Do?
Plaintiffs in a class action lawsuit against Wells Fargo alleged that the company charged mortgage holders more for BPOs than they paid to real estate brokers and did not reveal those marked up charges on mortgage holders’ monthly account statements. They not only filed suit alleging fraud and unjust enrichment, they also alleged that Wells Fargo violated the federal Racketeering Influenced and Corrupt Organizations (RICO) Act.
A Major Convenience for Claimants
This agreement is different from most in that it is a non-reversionary common fund settlement, which means that Wells Fargo will have to pay the entire $50 million, and members of the class action against Wells Fargo will not need to file any sort of paperwork in order to obtain compensation.
In many instances, plaintiffs in class action lawsuits have to provide extensive documentation before they can receive what they are owed from the defendant. In fact, the paperwork requirement can be so much of a hassle that many plaintiffs simply choose not to deal with it. As a result, defendants often pay only a small percentage of what they owe.
But not this time. The settlement will require Wells Fargo to pay all of the $50 million, and claimants will not have to provide any documentation.