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Wells Fargo faces new accusations that it tried to capitalize financially on its customers without their permission — this time by allegedly modifying mortgage terms for people who had filed for bankruptcy protection, USA Today reported today. With the smoke still lingering from the firestorm that erupted from the bank's opening of fake consumer accounts, Wells was hit with multiple lawsuits alleging that the bank surreptitiously extended loan lengths, potentially costing some homeowners tens of thousands of dollars. The bank pulled off a "virtual hijacking" with the alleged scam by implementing "illegal stealth modifications" in at least 100 cases across the country, plaintiffs attorneys said in court papers filed on June 7 in the U.S. Bankruptcy Court for the Western District of North Carolina, where they are hoping to assemble a class-action group. Wells Fargo spokesman Tom Goyda said the bank "strongly denies the claims" because the company clearly identified "modification offers" in letters to customers, their attorneys and the respective bankruptcy courts.

Even as Wells Fargo was reeling from a major scandal in its consumer bank last year, officials in the company’s mortgage business were putting through unauthorized changes to home loans held by customers in bankruptcy, a new class action and other lawsuits contend, the New York Times reported today. The changes, which surprised the customers, typically lowered their monthly loan payments, which would seem to benefit borrowers, particularly those in bankruptcy. But deep in the details was this fact: Wells Fargo’s changes would extend the terms of borrowers’ loans by decades, meaning they would have monthly payments for far longer and would ultimately owe the bank much more. Any change to a payment plan for a person in bankruptcy is subject to approval by the court and the other parties involved. But Wells Fargo put through big changes to the home loans without such approval, according to the lawsuits.

The Consumer Financial Protection Bureau announced yesterday that it is fining Fay Servicing more than $1 million for “illegal foreclosure practices,” HousingWire.com reported. According to the CFPB, an investigation found that Fay Servicing was “keeping borrowers in the dark” about their foreclosure prevention options. The bureau also said that Fay Servicing “illegally launched or moved forward with the foreclosure process while borrowers were actively seeking help to save their homes,” a practice sometimes referred to as “dual tracking.” For these violations, the CFPB is ordering Fay Servicing to pay up to $1.15 million to consumers who were subjected to the company’s “illegal servicing practices.”

A federal judge on June 2 blocked Ocwen Financial Corp.’s bid to test the constitutionality of the Consumer Financial Protection Bureau in the early stage of a closely watched enforcement case (Consumer Financial Protection Bureau v. Ocwen Fin. Corp. , S.D. Fla., 17-cv-80495, 6/2/17), Bloomberg BNA reported yesterday. The ruling by Judge Kenneth Marra of the U.S. District Court for the Southern District of Florida allows the CFPB to proceed unimpeded with its April lawsuit alleging that Ocwen violated consumer protection laws in servicing loans of distressed borrowers. Ocwen sought an early case conference on the constitutional question, saying that it should be settled before allowing the CFPB to go further. Judge Marra disagreed, saying that would depart from settled procedural rules and might delay the case. He said Ocwen may still make its constitutional attack on a motion to dismiss. Marra also declined Ocwen’s request to seek U.S. Attorney General Jeff Sessions’ views on the CFPB’s constitutionality. In a separate order June 2, Judge Marra also said that it’s “premature” to invite the Attorney General’s views at this point.

Fannie Mae, the government-controlled mortgage finance giant, said on Tuesday that it had stopped selling properties to the firm, Vision Property Management, after conducting a review of the firm’s rent-to-own program, which operates in more than a dozen states, the New York Times reported today. The mortgage finance company will also impose restrictions on future sales of foreclosed homes to firms that engage in abusive forms of seller financing — which includes selling homes on either rent-to-own leases or in long-term installment agreements known as contract for deed. The policy change by Fannie could put a big crimp in the business model of certain investment firms that have sprouted up since the financial crisis. These firms buy foreclosed homes on the cheap and sell them to people unable to qualify for a conventional mortgage.