A New Mexico judge issued a $3.2 million judgment against Wells Fargo & Co. for foreclosing on a man’s home after his death, even though he had a purchased insurance policy through the bank that would have covered the remaining balance on the mortgage. The judge called the bank’s conduct “shocking” and so reprehensible that in addition to damages, attorney’s fees and court costs; she awarded James Dollens’s estate $2.7 million in punitive damages.
Dollens had purchased an accidental death mortgage insurance policy for his Rio Rancho home that was marketed by Wells Fargo and issued by Minnesota Life. His death was reported immediately to Minnesota Life and to Wells Fargo to make a claim under the insurance policy.
However, instead of collecting funds from the insurance policy, Wells Fargo sent notices about the loan being in default and sent the loan to foreclosure. There was $125,000 owed on the mortgage.
When the bank received a $133,559 check from the insurance company in May 2011, it collected delinquent payments, late fees, and fees for lawyers and for 18 property inspections, leaving only $4,400 for Dollens’s estate ‘‘because of misapplication of the insurance proceeds,’’ the judge said.
Wells Fargo argues the family should have continued making payments regardless of the insurance policy. The judge called this case “a breach of the covenant of good faith and fair dealing- The bank’s unwillingness and failure to hold off on the foreclosure even when requested to do so by the insurance company was shocking.”
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