Wells Fargo Reaches $57 Million Settlement Over Pandemic Mortgage Reporting

Borrowers whose credit scores were impacted by COVID-19 forbearance reporting may be eligible for payments.

Published on Feb. 27, 2026

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Wells Fargo has agreed to pay nearly $57 million to settle a class-action lawsuit alleging the bank hurt some mortgagors' credit scores during the early months of the COVID-19 pandemic. The proposed settlement concerns borrowers who entered COVID-related mortgage forbearance under the CARES Act, where Wells Fargo is accused of reporting some accounts as 'in forbearance' instead of 'current', potentially lowering borrowers' credit scores.

Why it matters

The settlement highlights issues that arose during the pandemic around mortgage forbearance and credit reporting, as homeowners sought relief but some faced unintended consequences to their credit. It also demonstrates the ongoing legal battles over pandemic-era policies and their impacts on consumers.

The details

Under the CARES Act, homeowners with federal government-backed mortgages who faced pandemic-related financial hardship could temporarily pause or reduce payments through forbearance. Loan servicers were generally mandated to keep reporting the account as 'current' to credit bureaus, so the borrower's credit score would not take a hit. However, Wells Fargo is accused of reporting some accounts as 'in forbearance' instead, which the plaintiffs argue could have lowered borrowers' scores.

  • The CARES Act became law in March 2020.
  • The proposed settlement received preliminary approval on January 9, 2026.
  • The deadline for class members to opt out or object is March 25, 2026.
  • A final approval hearing is scheduled for April 17, 2026.

The players

Wells Fargo

A major U.S. bank that has agreed to pay nearly $57 million to settle the class-action lawsuit.

CARES Act

The bipartisan relief package passed by Congress in 2020 that allowed homeowners to temporarily pause or reduce mortgage payments during the COVID-19 pandemic.

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What’s next

The court has set March 25, 2026 as the deadline for class members to ask to be excluded from the settlement or file objections. A final approval hearing is scheduled for April 17, 2026, when the judge will decide whether to grant final approval and allow payments to move forward.

The takeaway

This settlement highlights the complex issues that arose during the pandemic around mortgage forbearance and credit reporting, as homeowners sought relief but some faced unintended consequences. It demonstrates the ongoing legal battles over pandemic-era policies and the importance of ensuring consumer protections, even in times of crisis.