Judge Rejects Class Certification In Wells Fargo Mortgage Fee Case
By CU Today Staff —
SAN FRANCISCO—A federal judge has refused to certify a proposed class of Wells Fargo mortgage borrowers who claim the bank improperly charged them rate-lock extension fees when Wells Fargo itself caused delays in closing their loans, finding that determining responsibility would require examining individual loan files.
The Sept. 9 decision by U.S. District Judge Haywood S. Gilliam Jr. of the Northern District of California was first reported by Law360.
The case, Morris v. Wells Fargo & Co., was brought by Anthony Morris, who alleged Wells Fargo failed to reimburse borrowers for rate-lock extension fees, or RLEFs, that should have been borne by the bank. The court previously explained that the fees extend the period during which a quoted mortgage rate is protected from market changes and that, generally, the party responsible for delaying the closing bears the extension cost. Morris sought to pursue the claims on behalf of other borrowers charged such fees.
But Gilliam concluded that the proposed claims could not be resolved on a classwide basis because determining whether a fee was improperly imposed would require deciding who caused each particular closing delay. According to Law360's report on the ruling, that would require a file-by-file review of individual borrowers' circumstances, defeating the common proof needed for class certification. The court had heard arguments on certification May 28, and the ruling had remained pending since then.
The litigation dates to 2023, but allegations over Wells Fargo's rate-lock extension practices go back considerably further. Earlier lawsuits alleged the bank charged borrowers when Wells Fargo-caused delays pushed closings beyond their locked-rate periods; one 2017 complaint alleged the fees could equal 0.125% to 0.25% of a loan. Wells Fargo currently tells borrowers that customer-paid rate-lock extensions are available, subject to fees, when a loan cannot close before the lock expires.
Originally reported by CU Today.