America’s third largest bank, Wells Fargo & Co. is in the news, once again, for denying loan modifications to homeowners due to incorrect determination of customers’ qualifications by the bank’s software. As a result, more than a thousand homeowners have their properties foreclosed on or at the verge of doing so, due to a tiny miscalculation on the bank’s part.
While the potential of blockchain in banking sector is under constructive consideration by the biggest firms around the world, the series of scams by banks like Wells Fargo and a few others, is a classic example of how the banking system we have been relying on so far, has never been fool-proof; a definitive reason for why we need blockchain technology in banking sector.
The mishap came to light following a regulatory filing lodged by United States Securities and Exchange Commission (USSEC) probing the issue. Among the ones affected, nearly 625 customers were denied or not confirmed on receiving mortgage modification, whereas 425 were foreclosed upon right away. The filing also set up an investigation questioning Wells Fargo’s possession of low-income housing tax credits.
In response to the enquiry, the bank has said that it has reserved a remedy of $8 million to compensate for the losses of those rendered ‘officially’ homeless.
Confessing the faux pas, bank officials confirmed the software error occurred while scrutinizing a certain number of bank accounts going through foreclosures between 2010 and 2015.
Recently, the banking company was also proven guilty before the Justice Department, for serving masses with incorrect income requirements about its mortgage loans; subsequently being slapped with a penalty of $2.09 billion. In another event from June 2018, the institution was covered in allegations by Securities and Exchange Commission for misleading a certain category of small and individual investors into investing in high-fees debt instruments, through which bank reportedly gained over $930,000 in principal, and the interest amounting to more than $178,000.