California homeowners may be eligible for part of a $56.85 million settlement involving Wells Fargo after the bank was accused of improperly reporting mortgage forbearances during the COVID-19 pandemic. In 2020, many Americans used CARES Act protections that allowed temporary pauses or reductions in mortgage payments due to financial hardship. A class action lawsuit claims Wells Fargo failed to accurately report some borrowers’ forbearance statuses to credit bureaus, allegedly violating the Fair Credit Reporting Act. The bank agreed to the settlement without admitting wrongdoing, and the final approval hearing is expected in April. Only certain borrowers will qualify, including those who had a Wells Fargo mortgage on a California property, were current on their payments when they entered a CARES Act forbearance, and later had their accounts reported as being in forbearance instead of remaining marked as current.

Eligible homeowners do not need to submit an application or complete a claim form to receive a payment. If the settlement is approved, qualified individuals will automatically receive a portion of the fund, although the exact amount is not yet known. The final payment will depend on the number of eligible class members, as well as legal fees and administrative expenses. Settlement checks must be cashed within 90 days after they are issued. Anyone who does not want to participate must submit an objection by March 25. Officials are also warning people to be cautious of fake messages or emails asking for personal information or payment details, since legitimate settlement recipients are not required to complete extra steps to receive their share.