Wells Fargo has agreed to a $56.85 million settlement to resolve a class action lawsuit alleging the bank inaccurately reported mortgage forbearance data during the COVID-19 pandemic, potentially harming the credit scores of thousands of California homeowners. The settlement, reached on February 17, 2026, centers on claims that Wells Fargo violated the Fair Credit Reporting Act (FCRA) by misreporting accounts enrolled in CARES Act forbearance programs as being “in forbearance” rather than “current.” This misreporting could have made it more demanding for homeowners to refinance mortgages or secure new credit at a time when interest rates were historically low.
The CARES Act, passed in early 2020, provided financial relief to Americans impacted by the pandemic, including provisions for mortgage forbearance. The law also included protections for borrowers’ credit reports, stipulating that accounts in forbearance should continue to be reported as current. However, the lawsuit alleged that Wells Fargo did the opposite, negatively impacting the creditworthiness of homeowners who were actively utilizing the relief measures designed to help them. The inaccurate reporting affected California mortgagors whose accounts were current and who received a CARES Act forbearance on or after March 27, 2020.
Who is Affected by the Wells Fargo Settlement?
The class action settlement benefits California homeowners who met specific criteria during the pandemic. To be eligible, individuals must have had a mortgage on a property located in California, had an account that was “current” at the time of forbearance, and received a CARES Act forbearance from Wells Fargo on or after March 27, 2020. Crucially, their accounts must have been reported as “in forbearance” (or a similar designation) by Wells Fargo to a consumer reporting agency. The settlement aims to compensate those whose credit scores were negatively affected by these inaccurate reports.
Wells Fargo has not admitted any wrongdoing as part of the agreement, but has consented to the $56.85 million payment to resolve the claims. The bank, a major provider of financial services including mortgages, has faced scrutiny in recent years over its business practices.
How Will the Settlement Funds Be Distributed?
Under the terms of the settlement, class members will receive an equal share of the net settlement fund, after deductions for legal fees and expenses. The exact amount each individual receives will depend on the total number of participating class members. Settlement checks will be issued with a 90-day cashing window.
Any funds remaining after the initial distribution may be used for a second round of payments if the amount is substantial enough to warrant it. If the remaining funds are insufficient for a second distribution, they will be donated to Credit Builders Alliance, a nonprofit organization dedicated to helping low- and moderate-income consumers improve their credit, according to the settlement details.
Significant Dates and Deadlines
Homeowners who believe they may be eligible for the settlement should be aware of key upcoming dates. The deadline to submit an exclusion or objection to the settlement is March 25, 2026. This means individuals who do not want to participate in the settlement must actively opt out by this date. The final approval hearing for the settlement is scheduled for April 17, 2026, where a judge will determine whether the settlement is fair and reasonable.
Notably, no claim form is required to benefit from the Wells Fargo CARES Act class action settlement. Class members who do not exclude themselves will automatically receive settlement benefits, simplifying the process for eligible homeowners.
Further details about the settlement, including eligibility requirements and frequently asked questions, can be found on OpenClassActions.com.
This settlement represents a significant outcome for California homeowners who experienced credit reporting inaccuracies during a period of widespread economic uncertainty. While the funds won’t fully undo the challenges of the pandemic, they offer a measure of relief for those whose financial standing was negatively impacted by the bank’s reporting practices.
The next key date in this case is the final approval hearing on April 17, 2026, where the court will review the fairness of the settlement. Affected homeowners are encouraged to stay informed about the process and consult with legal counsel if they have specific questions or concerns.
Have you been affected by this settlement? Share your thoughts in the comments below, and please share this article with anyone who might be eligible.
