Filed in federal court in San Francisco, the lawsuit centers around fees known as rate-lock extension fees. These fees are charged, according to the allegations, when a borrower applies for a mortgage for which the lender promises a set interest rate, as long as the loan is approved within a certain time period, typically between 30 and 45 days. If the loan takes longer to approve, the borrower must pay a fee to keep the previously promised rate.
As with most lenders, Wells Fargo is supposed to waive the fee if it is responsible for holdups. Borrowers only pay the fee if they are responsible for the delays by, for instance, failing to submit documents on time.
According to the allegations in the lawsuit, Victor Muniz, a Las Vegas security guard, was charged a rate lock extension fee by Wells Fargo of $287.50, despite the delays in his mortgage approval being caused by the bank and despite Muniz being told by a Wells Fargo banker that he would not have to pay the fee.
Muniz asserts that Wells Fargo was responsible for the delays approving his application partially because they hired an appraiser who was out of the country while Muniz’s mortgage application was being processed. Muniz has brought the suit on behalf of himself and all other borrowers who may have paid improper fees.