Wells Fargo agrees to $56.85 million settlement — check if you qualify for a payout

Wells Fargo has agreed to a $56.85 million settlement tied to claims that some customers’ credit scores were damaged during the COVID-19 pandemic. The class-action lawsuit centers on how certain mortgage forbearance accounts were reported to credit bureaus.

While the bank has not admitted any wrongdoing, it chose to settle after allegations that it mishandled credit reporting during a period of widespread financial hardship.

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The case now awaits final approval from a California judge, and eligible borrowers could soon receive payments if the settlement moves forward, as per a report by USA Today.

What sparked the lawsuit against Wells Fargo?

The lawsuit claims that during the early months of the pandemic, Wells Fargo placed some mortgage borrowers into forbearance after they communicated financial hardship or the possibility of hardship.

Mortgage forbearance allowed homeowners to pause or reduce payments during difficult times. However, the legal complaint alleges that Wells Fargo violated the Fair Credit Reporting Act by improperly reporting some of those accounts to credit bureaus.

According to the lawsuit, the bank failed to comply with the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Under that federal law, lenders were required to report accounts placed in pandemic-related forbearance as “current,” even if payments were temporarily paused. The intent was to prevent damage to borrowers’ credit scores during an unprecedented crisis, as per a report by USA Today.

Instead, the lawsuit alleges that some accounts were inaccurately reported, potentially harming consumers’ credit standing.

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Who is eligible for the Wells Fargo settlement?

Not all Wells Fargo customers qualify. Eligibility is limited to people who own or previously owned property in California and had a Wells Fargo mortgage, as per a report by USA Today.

To qualify, borrowers must have received a CARES Act forbearance on or after March 27, 2020. In addition, their mortgage accounts must have been “current” and reported as “in forbearance,” or something similar, by Wells Fargo to a consumer reporting agency.

If the court grants final approval, qualifying consumers do not need to submit a claim form. Payments will be issued automatically from the settlement fund.

However, those who wish to object to the settlement or opt out must file a written objection with the Superior Court of California in San Diego by March 25, 2026. Anyone who wants to speak at the final hearing must also submit a written Notice of Intention to Appear by that same deadline.

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When will the settlement be finalized?

A judge in San Diego is scheduled to decide whether to approve the $56.85 million settlement at a final hearing on April 17. Only after court approval will payments move forward.

The agreement does not mean Wells Fargo admitted fault. Instead, it resolves the claims tied to the reporting of certain mortgage forbearance accounts during the pandemic, as per a report by USA Today.

For many affected homeowners, the decision could mark the end of a long-running dispute over how their credit information was handled during one of the most financially uncertain periods in recent history.

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FAQs

Do I need to apply to receive a payment?
No. Eligible borrowers will automatically receive compensation if the court approves the settlement.

Who qualifies for the settlement?
California property owners with a Wells Fargo mortgage who received CARES Act forbearance on or after March 27, 2020, and had qualifying account reporting.