In a fairly unusual move, a senior Wells Fargo executive was summoned to court by a bankruptcy judge late last week to answer pointed questions about the bank’s mortgage modification practices. The case, widely publicized by the New York Times, centered on a Phoenix homeowner who had recentlybecome unemployed and found herself struggling to make payments on her Wells Fargo-serviced mortgage. Bobbi Giguere testified that she submitted request after request to Wells for a loan modification, along with the proper documentation required by the servicer. “I submitted the paperwork three times, and nothing happened,” Giguere told the Times, adding that each time she called to check on the progress of her request, the bank’s servicing department had no record of her appeal and asked her to resend documentation. In a last ditch effort to keep her home, Giguere filed for bankruptcy. Sympathetic to her plight, Judge Randolph J. Haines called in Wells Fargo Home Mortgage’s SVP Joseph Ohayon to explain. Ohayon found himself in the hot seat when records produced from Giguere in front of the judge contradicted earlier statements he’d made. Ohayon told attorneys during preliminary questioning that Giguere had repeatedly failed to include a financial worksheet with her submissions, the Times reported. But in court, Ohayon was asked to read a letter from Wells Fargo that Giguere retrieved from her files, which made no mention of any missed documentation. On the witness stand, Ohayon said, “Mrs. Giguere is right. The letter did not ask for a financial worksheet.” “This is certainly not an isolated case,” Haines said. “The kind of story I hear from this debtor is one that I and other bankruptcy judges around the country are hearing over and over and over again.”

According to the Times, Wells Fargo had decided back in March that Giguere did not qualify for assistance under the government’s Home Affordable Modification Program, although Giguere did not learn of the bank’s decision until last Thursday. Ohayon told Judge Haines borrowers have “never been told,” by the bank that their requests for a modification were no longer being considered. Ohayon said, “I don’t necessarily think we’ve done a poor job of communicating with our customers, but I think there is an opportunity to improve the overall customer experience during what is a very difficult time for them.” The Times reported that Haines did not sanction Wells Fargo for its oversight in Giguere’s case, but the bank did say it would again enter modification negotiations with the Phoenix homeowner. Wells Fargo has also scheduled a three-day seminar at the Phoenix Convention Center, beginning on Tuesday, to give customers a chance to meet face-to-face with a bank representative and learn whether their application has been approved or denied, the Times said. Wells was highly criticized last month when the Treasury Department disclosed that the bank had started Home Affordable Modification trials on only 6 percent of its eligible mortgages, considering the government program had been underway for six months. At the hearing, Wells Fargo faulted the Treasury’s steady stream of servicing revisions for its slow progress. Some observers say Giguere’s public case underscores the frustrations of a growing number of homeowners seeking mortgage relief under the government’s program, as well as rising concerns from bankruptcy judges, in particular, over servicers’ record-keeping and business procedures. Others feel Giguere’s story may make a stronger case for bankruptcy cramdowns — a measure the industry has aggressively lobbied against.