Gretchen Morgensen (NY Times, Wells Fargo)

Gretchen Morgensen (NY Times, Wells Fargo) by The Financial Exchange

00:08:36

Transcript - Not for consumer use. Robot overlords only. Will not be accurate.

We're joined by collection mortenson from the New York Times to talk about the latest scandal. That is facing Wells Fargo head on I Gretchen welcomed the show. We're glad to talk to us about these uses the latest scandal Levy they are just getting over the last scandal which cost him quite a bit of money. And the CEO's job now they got another one. Well as you know idea or mechanically you're talking about is that while Mario opened now. Or afterward without their Google that there were last and here we have another situation where the bank is. Modifying loans mortgage loans for troubled borrowers who are in bankruptcy. Without their approval and without a court. Approval but even more experience. Well it up a bank that has a problem that first getting things. Approved a political back. Now the and you recited a few instances in your story. Sounds like some of these loan modifications actually did quite a bit of damage to the borrowers. Well here's a problem at you know. Ben let these situations are very closely scrutinize. They have to get any changes to a borrower's. Plan. Where by the creditor and by the borrower. It on all very very very serious very good and yet while apple doesn't get let. Through changes in the he termed. And what that means we're a borrower's bankruptcy is. If they come out of bank at the far more than they thought they would then they're going to be go right back in the foreclosure. My gosh now with the the bank also Wells Fargo was earning compensation. From the government. For doing these loan modifications how much were they making so the issue in. And and perhaps he can explain Gretchen beat their financial motivation for taking these actions. There a couple of ways that the being. Benefited. I'm of these loan modifications one is it up first they didn't notice the change is going through and let it. Continue them and that bank had much longer term on the mortgage. And the borrower previously had in many cases. They were standing alone by decade. So a forty year term that far more interest would be like if I am under the borrowers creepy as well that's the starter. Do you expect that way that they would benefit is that government has program. Help troubled borrowers. Modify their loans and say hey bank. 800 dollars per notifications. And I'm not sure that the they receive the money because they did not we. Well it's certainly questions on the planet but if they did that would be huge problem because these are loan modifications that should never have gone through. No Gretchen you're not talking about an isolated incident either. You you're talking about something that seemingly was going on nationwide. It seemed to have been going on in quite a few states we are what we're. Seven different. State or five different states have a different take than any one particular day. In on particular data on. The banks that that it had made 100. Changes to loan payment plan and though. It does have the potential to be ready and it the problem is that if I can go out there that it is because. Many borrowers who are in bankruptcy. Have lawyers are helping them and don't respond to these kinds of things that though it upset a dog that doesn't are like that the situation. But you know it is not a one off. Problem for wells are. Or. How do they defend themselves what they see it in their defense or is it is anybody willing to explain like what happened here have you talked anybody at the company. You know I put them a question to them very expensive very Egypt questions how could this be happening. Particularly after the unapproved. I'm requested the bank account and handle how could this be happening at the bank again and in a particularly. Really you know damaging late of people in bankruptcy who were the most vulnerable. Clients that the bank right yeah they did not reply it that we it was simply sort of rote response that the bank impact that which led. We try to help borrowers by providing loan modifications they were not for. In my area in depth question but unfortunately I can't tell you what their defensive I don't know what they would argue that it was. Here in the air problem but the fact is that it happened so many people and they're not telling me what I. Think other banks are doing the same thing Gretchen. I have not heard of other banks do anything I ask the lawyers who had been. Being as if they've seen other banks doing and they said no not the moment. My guess is Wells Fargo is gonna have an opportunity to explain their position in front of the judge what do you think. That is absolutely true it ain't bankrupt ejected them they are serious they don't like it. When banks start to run roughshod over the bankruptcy process and there's also a possibility of the United States senate seat which is the part of the Department of Justice could get involved because that's the organization. The tried to maintain the integrity. Of the United States bankruptcy system. They didn't need this to me this is yet another. Bad look for Wells Fargo and the day because this one Gretchen listens gonna last a lot longer the last when they're able to. You know that resolved I think pretty quickly as amazed at how quickly got out from underneath that last one this one could take it they could be battling this for five years. Well I don't know it's very very convoluted. Worked as a everything having to do it on mortgages are very complicated. There's no doubt. After the story was published. I I heard that people and other states saying that this happened there as well. So yeah I think it suggests starting I certainly don't think I think we're closer to the beginning of the problem and the end of the problem for Wells Fargo. But yet they kept them going to do. Via boot C. Great work in great research Gretchen thank you very much for your time. Gretchen morgans and New York Times and I can tell you to the win in the Wells Fargo went through that they can count. Debacle a couple months ago yes other banks were swept. They they were going through the same thing and I would suggest TU. If Wells Fargo. Is found guilty sounds like casualties and here. My guess is you're gonna the other banks get dragged through the mud. One that comes to mind is bankrupt our country once got apple constantly. When you think you know I mean countrywide was the vivid epicenter of the mortgage rates so if Wells Fargo was doing this and it a pretty clean cool Wells Fargo head like is they didn't get into the no doc loans countrywide lived and dock port so. If it wells Fargo's getting hit by this. I gotta tie I'd be shocked and be absolutely shocked at Bank of America is not involved in the same thing I didn't know they had that financial motivation yet you. You have to imagine that you're seeing something like this going on at other banks well but. It's you know again at the big thing is that this is being done with out people's consent and the problem is that the bank with a with. Unity discipline against the Dutch. Right you've got a problem yet judges are not forgiving of style only see it in you know what they're gonna say is earned their defense was. We we had lead this big pipeline. Of loans needed to be modified whose fault is that we have no choice but to to push these modifications through and we couldn't weep for the judges. Judge you're you're absolutely right to judge is gonna say. Hate you should not my problem I didn't make the loans well and and the reason they wanted to modify these laws is nobody's making payments now you'd years going I know that they're seeing these assets of theirs they're just being completely devalued so. I get that they want to do some but the judge can look at and say look not my problem that you made battle and that is exactly what happened the banks made terrible loans back in 2005. And the bank and they wanted to modify the loans in 2010. They are paid 16100 bucks by the government to modify these loans that they should have made the first place.
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