Wells Fargo to Pay $56.85 Million Over CARES Act Credit Reporting: Are You Eligible?

The lawsuit alleged that Wells Fargo marked certain mortgage accounts as “in forbearance” when they should have been reported as “current,” according to a settlement notice to consumers.

Rudy Blalock

Published: 2/19/2026, 5:44:44 AM EST

Wells Fargo to Pay $56.85 Million Over CARES Act Credit Reporting: Are You Eligible? — A sign is posted in front of a Wells Fargo bank office in San Rafael, Calif., on April 11, 2025. (Justin Sullivan/Getty Images)

Wells Fargo has agreed to pay nearly $57 million to settle claims that it misreported mortgage accounts during the pandemic—an error that allegedly damaged credit scores for thousands of California homeowners.

The $56.85 million agreement resolves a class-action lawsuit accusing Wells Fargo of violating the federal Fair Credit Reporting Act (FCRA) by failing to properly report mortgage forbearances granted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The proposed deal, which received preliminary approval from the court on Jan. 9 this year, is scheduled for a final hearing on April 17, according to the court approved website for the CARES settlement.

Claims of Incorrect Reporting

The lawsuit alleged that Wells Fargo marked certain mortgage accounts as “in forbearance” when they should have been reported as “current,” according to a settlement notice to consumers. That label caused harm to consumers’ credit scores, even though their accounts were not behind on payments.

Under the CARES Act, lenders that offered forbearances—temporary pauses on mortgage payments during the COVID‑19 crisis—were required to continue reporting those borrowers as current if their accounts were up to date before the forbearance began. Plaintiffs claimed Wells Fargo failed to meet that standard.

Who Qualifies for a Payment

The settlement applies only to California borrowers. Eligible class members include residents who:

Had a Wells Fargo mortgage for a property in California.
Were current on payments at the time they entered a CARES Act forbearance on or after March 27, 2020.
Had their accounts reported to credit agencies as “in forbearance,” or a similar term, by Wells Fargo.

Wells Fargo did not admit any wrongdoing but agreed to the settlement to end the case. The bank, which offers a wide range of financial services including home loans, did not immediately respond to requests for comment from NTD News.

What Participants Can Expect

Affected borrowers will automatically receive a one‑time, pro‑rated cash payment once the settlement is finalized—no claim form is needed. Each participant will receive an equal share of the net settlement fund after deductions for attorneys’ fees, administrative costs, and service awards to the lead plaintiffs, according to the settlement notice.

Checks will be mailed to the last known address of each eligible homeowner. Recipients will have 90 days to cash their checks before they expire. Any money left unclaimed after the initial distribution could fund a second round of payments if the remaining balance is large enough.

If not, leftover funds will be donated to the Credit Builders Alliance, a nonprofit that helps low‑ and moderate‑income consumers improve their credit standing.

Deadlines for Class Members

The deadline to exclude oneself or object to the settlement is March 25. To object, class members must submit a written letter to the settlement administrator describing specific reasons for opposition and provide the required identifying information.

Those who do not opt out by the deadline will automatically receive payments once the court grants final approval and any appeals conclude.

The official settlement website, CARESActLitigation.com, includes key dates and contact information for the administrator.

Background on Lawsuit

The class-action case claimed Wells Fargo misapplied provisions of the CARES Act, which directed financial institutions to ensure that borrowers receiving COVID-related loan accommodations were not penalized on their credit reports. The bank allegedly reported those accounts as being in forbearance—even for borrowers who were fully current—creating inaccurate credit profiles.

The plaintiffs argued that this practice violated both federal law and California’s own consumer protection rules, including the California Consumer Credit Reporting Agencies Act. The disputed reporting, they said, potentially limited borrowers’ access to new credit or favorable mortgage refinancing terms.

What’s Next

The court will determine on April 17 whether to finalize the settlement. If approved without appeal, payments could begin soon after.

For those wondering whether they qualify, eligibility depends solely on having had a California mortgage with Wells Fargo that met the specific criteria outlined in the settlement documents. More information and updates can be found at CARESActLitigation.com.