A Wells Fargo bank sign. Image courtesy of Mike Mozart / CC BY 2.0

The Office of the Comptroller of the Currency has assessed a $250 million civil money penalty against Wells Fargo Bank and issued a new enforcement action with the bank for problems in its home lending program.

The penalty was assessed for “unsafe or unsound practices” in Wells Fargo’s home lending loss mitigation program, the OCC said in a statement yesterday. The penalty was also based on violations of a consent order issued in 2018 for deficiencies the agency had found in the bank’s enterprise-wide compliance risk management program.

“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 Hsu said in Thursday’s 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.”

The new enforcement action with Wells Fargo requires the bank to take comprehensive corrective actions to improve the execution, risk management, and oversight of the bank’s loss mitigation program, the OCC said, noting that the bank had failed to establish an effective home lending loss mitigation program.

The order also restricts Wells Fargo from acquiring certain third-party residential mortgage servicing. The bank also cannot transfer borrowers out of its loan servicing portfolio until remediation is provided, unless the move is required by an investor’s contractual right, the OCC said.

In a separate statement yesterday, Wells Fargo’s CEO Charlie Scharf said the OCC’s actions “point to work we must continue to do to address significant, longstanding deficiencies.”

“As I’ve said over the past year, our work to build the right foundation for a company of our size and complexity will not follow a straight line,” Scharf said. “We are managing multiple issues concurrently, and progress will come alongside setbacks. That said, we believe we’re making significant progress, the work required is clear, and I remain confident in our ability to complete it.”

Wells Fargo also said a 2016 consent order with the Consumer Financial Protection Bureau for the bank’s retail sales practices had expired on Wednesday.

“The expiration of the CFPB’s 2016 consent order is representative of progress we are making,” Scharf said. “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 added that Wells Fargo was focused on building “a stronger, better company – one that serves customers at the highest standards.”

“Sometimes – as is the case today – we will reach a positive milestone on one set of issues and be reminded that we need to redouble our focus on another” Scharf said. “That will not stop us from getting to where everyone expects us to be, and where we expect ourselves to be.”