Homeowners, Wells Fargo head to trial over mortgage fees
By Nate Raymond
NEW YORK (Reuters) - Wells Fargo & Co, (WFC.N: Quote) the largest U.S. mortgage lender, is set to go to trial on Monday as homeowners seek to recoup about $629 million for alleged overcharges by a company once owned by Wachovia Corp.
Jury selection is scheduled to begin in federal court in Manhattan in a long-running class-action lawsuit concerning HomEq Servicing, a subprime mortgage servicer.
The lawsuit was filed in 2001 on behalf of borrowers whose mortgages were owned or serviced by HomEq or the lender whose loans it was established to manage, Money Store.
Wells Fargo bought Wachovia at the end of 2008 and thus never owned HomEq, but a spokesman confirmed it remained liable for some claims raised in the lawsuit. Ocwen in a statement said it did not have similar liability. Barclays declined to comment.
The lawsuit filed by Joseph Mazzei, a California resident, contends that HomEq kept charging borrowers monthly late fees even after their mortgages went into default, making the full amounts owed immediately due.
It also said HomEq violated its contracts by charging attorneys' fees in foreclosure and bankruptcy and splitting them with a nonlawyer, specifically a unit of Fidelity National Information Services Inc (FIS.N: Quote). Sharing fees in this manner is illegal throughout the country, the lawsuit said.
In an October court filing, a damages expert for the plaintiffs estimated damages at $59.3 million for late fees and $282.7 million for attorneys' fees, plus pre-judgment interest of $287.4 million. Continued...