If you have an insurance policy through your mortgage company, it might not actually pay off the mortgage after you pass away…unless you get a lawyer and fight.
James Dollens purchased a home in 2003 with a loan from Wells Fargo. In 2010, he died accidentally at his workplace. Prior to his death, he purchased an insurance policy through Wells Fargo. Upon his death, the insurance proceeds would pay off the remaining mortgage balance. After receiving this policy, his premium was added to his monthly mortgage payment. After his death, his son notified Wells Fargo and made a claim under the policy. Due to Mr. Dollens death, the mortgage was not paid. Wells Fargo began sending statements and letters informing Mr. Dollens widow that the loan was in default. Wells Fargo was notified several times by his widow, his son and the underwriter of the insurance policy, Minnesota Life, to cease any collection or foreclosure activity while the death claim was being processed. However, Wells Fargo ignored these requests and proceeded to hire a law firm to initiate foreclosure of the property despite the insurance policy. Months after the foreclosure action was filed, Wells Fargo received over $133,000 from Minnesota Life which represented the proceeds due under the death policy. Rather than apply the funds immediately, Wells Fargo waited almost a week, placed the funds into a suspense account and began efforts to collect a balance of almost $4,500 left on the account. Wells Fargo failed to inform the widow or son that the account was reinstated and never ceased the foreclosure of the home despite the funds being paid by the policy. Dollens estate filed suit soon after for wrongful foreclosure, breach of contract and other claims against Wells Fargo. After a trial was held, the District Court found in favor of Dollens and awarded over $3.1 million in actual and punitive damages, plus attorney fees. The court found the systemic misconduct by Wells Fargo reprehensible. The evidence of wrongful conduct in this case merited a significant verdict to deter the conduct of Wells Fargo in the future.
To read the Courts opinion click the following: order letter decision NM Dollens-v-Wells-Fargo_$3-million-in-damages_8-13