Wells Fargo sued for reducing HELOCs
A class action lawsuit, filed Aug. 19, accuses Wells Fargo of fraud, saying the bank froze millions of dollars in home equity loans by falsely claiming that its customers’ home property values had declined significantly. The suit, which was filed in the Northern District of Illinois, alleges that Wells Fargo unlawfully failed to accurately assess the value of customers’ homes before concluding that there had been a significant decline in property value.
“Even putting aside the fact that what they are doing is illegal, there’s no justification for denying people these secured credit lines in favor of unsecured high-interest credit cards," said attorney Jay Edelson, whose law firm, KamberEdelson LLC, filed the suit and has previously filed similar class action lawsuits against JPMorgan Chase, WAMU and Citibank over their respective home equity line of credit (HELOC) account suspension practices. "This is the type of greed that lead to taxpayers having to bail out banks like Wells Fargo in the first place.”
The class action suit is filed on behalf of Michael Hickman, 46, of Westmont, Ill. who alleges that the credit limit on his HELOC account was reduced due to a supposed substantial decline in the value of his home. In reality, the complaint alleges that Hickman’s home and the homes of thousands of other class members did not substantially decline in value; rather, Wells Fargo used a variety of unreliable computer models to produce artificially deflated values. The suit further alleges that Wells Fargo failed to provide customers with proper notice of the reductions and that the bank improperly required customers to seek reinstatement by paying upfront for their own property appraisals.
Following the reduction of Hickman’s HELOC credit limit, Wells Fargo offered to raise the limit available on one of his higher-interest credit cards.
“In this economy, what Wells Fargo and other lenders are doing to everyday customers like Michael Hickman is simply unconscionable,” said Edelson.
Following the announcement of the lawsuit, the office of KamberEdelson was bombarded with calls, complaints and media requests from people in similar situations with Wells Fargo.
"My firm filed a class action lawsuit against Wells Fargo, alleging that it illegally and fraudulently reduced and suspended homeowners' home equity lines of credit throughout the country," said Edelson. "In the 12 hours following the announcement of our lawsuit, we received more than 400 calls and emails from Americans who shared their stories of betrayal by Wells Fargo. We heard from single moms, school teachers, executives and business owners. And most shocking of all, we heard from members of the military, the men and women serving in the armed forces, who Wells Fargo dishonored. Like its own well-worn horses and carriage logo, Wells Fargo has trampled on the same men and women who not only helped bail out the banking industry, the American taxpayer, but also those who continue to risk their lives protecting our country during a time of two different wars."
Edelson is joined on the suit by KamberEdelson attorneys Steven Lezell and Evan Meyers. Just last year, Edelson settled a nationwide case involving lead paint contamination with Thomas the Tank Engine & Friends Wooden Railway childrens toys that was valued at over $30 million. Edelsons firm also was lead counsel in the lawsuits coming out of the 2008 contaminated pet food recall, which resulted in a settlement of over $24 million. Edelson testified before the U.S. Senate in connection with that case.
"We are astonished by the arrogance from Wells Fargo reinforced in its response to our lawsuit," said Edelson. "The bank claimed, without explanation, that it was both legally and morally permitted to jeopardize the financial security of tens of thousands of families, while at the same time take $25 billion in taxpayer money. We would like members of Congress to request that Wells Fargo personally meet with the hundreds of people who have contacted our firm. These families are hurting because of Wells Fargo and, instead of hiding behind press statements, Wells Fargo should get to know the customers they've abandoned."
To download a copy of the lawsuit, click here.
For more information, visit www.kamberedelson.com.
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