Wells Fargo has agreed to pay $56.85 million to settle a class action lawsuit over how it reported certain mortgage accounts to credit agencies. The case affects many current and former customers in California who received help with their mortgage payments under the federal CARES Act.
The CARES Act was passed early in the COVID-19 pandemic to give borrowers temporary relief. It allowed people who were current on their mortgage to pause or reduce payments without harming their credit history. To make this work, lenders were required to report accounts as “current” to credit reporting agencies even when those accounts were in forbearance.
According to the lawsuit, Wells Fargo mistakenly told consumer reporting agencies that some borrowers’ accounts were “in forbearance” or similar. This type of reporting can look like the borrower is falling behind on payments. The plaintiffs claimed this hurt their credit scores and made it harder for them to get loans, credit cards, or other financial help.
Wells Fargo has denied admitting any wrongdoing but agreed to the settlement to avoid ongoing litigation. The settlement still needs final approval from the court at a hearing set for April 17, 2026. Once the settlement is approved, payments will start being sent to eligible customers.
This settlement is for California residents with a Wells Fargo-serviced mortgage who:
Were up-to-date on their mortgage payments when they entered a CARES Act forbearance.
Received a CARES Act forbearance on or after March 27, 2020.
Had their accounts reported to a credit reporting agency as being “in forbearance” or similar when they should have been marked as “current.”
If these conditions apply, those individuals may receive a one-time, pro-rated share of the settlement money. How much each person receives will depend on the number of eligible members and how much is left in the fund after fees and costs are paid.
Most people in the class action do not need to file a claim. Payments will be issued automatically by check to the last known address on file with Wells Fargo. Checks must be cashed within 90 days of being sent.
The court has already set a deadline of March 25, 2026, for people to ask to be excluded from the settlement or to raise objections. After that date, those who stay in the class will share in the settlement when it is approved.
Credit reports are a key part of a person’s financial life. They help lenders decide whether to offer loans and on what terms. When accounts are reported incorrectly, even if payments are actually up to date, it can lower someone’s credit score. This may mean higher interest rates or even denial of credit.
Consumer rights advocates say settlements like this remind banks of the importance of accurate reporting to credit bureaus. The settlement could also motivate lenders to improve their systems and avoid errors in the future.
For now, affected Wells Fargo customers in California should make sure their contact information is current with the settlement administrator so they get their payments after the court approves the deal.