US bank Wells Fargo has agreed to pay $50 million to settle a class-action lawsuit that accused the bank of overcharging hundreds of thousands of homeowners for appraisals ordered after the homeowners defaulted on their mortgage loans. The settlement involves the bank to mail cheques to more than 250,000 customers nationwide whose home loans were serviced by the bank between 2005 and 2010. The cheques will be for $120. In the US, when a borrower falls behind on a loan, mortgage contracts typically let the lender order an appraisal of the home’s current value. The cost of that appraisal, known as a broker price opinion, can be passed on to the borrower, but Wells Fargo used one of its own subsidiaries to conduct appraisals and then routinely marked up the cost. Borrowers would be charged $95 to $120 for a service that cost the bank $50 or less, the complaint said. Several homeowners filed suit against Wells Fargo in 2012 in a Northern California federal court. Last year, a judge granted class-action status to a portion of the claims related to racketeering charges. Wells Fargo said it disagreed with the claims but agreed to settle the case to avoid further litigation.
