Wells Fargo & Company (WFC - Free Report) is facing yet another probe related to denying or not offering modifications in mortgage loans that about 625 customers were eligible to at the time. Of the impacted customers, homes of about 400 people were foreclosed by the company.
Per the bank’s internal review, attorney fee-related “calculation error” caused by a mortgage underwriting tool is accountable for the mishap. Accounts that were undergoing foreclosure process in the period between April 2010 and October 2015 were majorly impacted.
In its quarter filing, Wells Fargo mentioned that it has kept aside $8 million as provisions to repay the affected customers.Also, the bank mentioned that an undisclosed government agency is currently investigating the manner in which Wells Fargo obtained certain federal low-income housing tax credits in connection with the financing of low income housing developments.
Other Ongoing Investigations
Wells Fargo has a long list of ongoing probes that continue to impact its reputation. The first enquiry being conducted on the bank’s several operations is related to consumer deposit accounts. The consumer financial protection bureau is investigating whether customers were wronged by Wells Fargo’s procedures related to freezing of consumer deposit accounts after it detected suspected fraudulent activity that affected those accounts.
Another ongoing investigation is related to fee calculations within certain fiduciary and custody accounts in Wells Fargo’s investment and fiduciary services business that resulted in customers being overcharged.
Moreover, regulators are investigating activities in the bank’s foreign exchange business on matters of inconsistent pricing.
Reshuffling at Wholesale Division
Last week, Wells Fargo announced some leadership changes in its wholesale division, including some of its investment banking operations. These changes came after the unit’s chief operating officer decided to leave his position.
The reshuffling also includes making of a separate group named commercial banking that would combine business banking, government and institutional banking along with middle market banking.
It seems difficult for Wells Fargo to steer clear of problems lately. In its quarterly report, the bank mentioned that legal charges could exceed its reserves by about $2.2 million.
However, the bank’s cost-control plan for 2018 might help deal with the pressure on costs. Also, its efforts to improve image among customers and improving economic backdrop might support growth in the near term.
Shares of Wells Fargo have lost 1.7% year to date against 3.8% growth recorded by the industry it belongs to.
Wells Fargo currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Comerica Incorporated (CMA - Free Report) has witnessed 4.5% upward estimate revision over the last 30 days. Also, the company’s shares have risen nearly 35% in the past year. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
M&T Bank Corporation (MTB - Free Report) has witnessed upward estimate revision of 2.4% over the last 30 days. Additionally, the stock has jumped more than 8% in a year’s time. It currently carries a Zacks Rank #2 (Buy).
Northern Trust Corporation’s (NTRS - Free Report) Zacks Consensus Estimate for current-year earnings has been revised 3% upward over the last 30 days. Also, the company’s shares have risen nearly 26.5% in the past year. It carries a Zacks Rank of 2, at present.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>