Wells Fargo was hit with a $250 million fine from a banking regulator after it failed to properly execute a mortgage loss mitigation program.
The Office of the Comptroller of the Currency said Thursday that the bank engaged in “unsafe or unsound practices” tied to its loan modification program and violated the terms of a 2018 consent order that was critical of its risk management systems.
“Wells Fargo has not met the requirements of the OCC’s 2018 action against the bank. This is unacceptable,” Acting Comptroller of the Currency Michael J. Hsu said in a statement. “In addition to the $250 million civil money penalty that we are assessing against Wells Fargo, today’s action puts limits on the bank’s future activities until existing problems in mortgage servicing are adequately addressed.”
In its own release, Wells Fargo acknowledged the OCC’s regulatory action and said that a separate issue, a Consumer Financial Protection Bureau consent order from 2016, had expired. Shares of the bank climbed 1.6% on the news.
Wells Fargo has paid more than $4 billion in penalties since its 2016 fake accounts scandal was uncovered. But the satisfaction of the CFPB consent order, one of the first actions it faced, could show that progress is being made. The bank had been operating under a dozen consent orders; one of them, from the Federal Reserve, limits the company’s ability to grow its balance sheet.
“Building an appropriate risk and control infrastructure has been and remains Wells Fargo’s top priority,” Wells Fargo CEO Charlie Scharf said in the statement. “The OCC’s actions today point to work we must continue to do to address significant, longstanding deficiencies.”
The OCC’s new enforcement action requires the bank to take “broad and comprehensive corrective” steps to improve the mortgage program and bars it from using third-party mortgage servicers.
Scharf said the expiration of the CFPB consent order tied to its sales practices is “representative of progress we are making” to resolve the bank’s many regulatory issues.
“We have done substantial work designed to ensure that the conduct at the core of the consent order – which was reprehensible and wholly inconsistent with the values on which this company was built – will not recur,” Scharf said.