Bankruptcy judges in North Carolina and Pennsylvania have admonished the bank over the practice, according to the class-action lawsuit filed last week. One judge called the practice “beyond the pale of due process.”

The lawsuits contend that Wells Fargo puts through changes on borrowers’ loans using a routine form that typically records new real estate taxes or homeowners’ insurance costs that are folded into monthly mortgage payments. Upon receiving these forms, bankruptcy court workers usually put the changes into effect without questioning them.

It is unclear why the bank would put through such changes. On one hand, Wells Fargo stood to profit from the new loan terms it set forth, and, under programs designed to encourage loan modifications for troubled borrowers, the bank receives as much as $1,600 from government programs for every such loan it adjusts, the class-action lawsuit said. But submitting the changes without approval violates bankruptcy rules and puts the bank at risk of court sanctions and federal scrutiny. When a lawyer for a borrower has questioned the changes, Wells Fargo has reversed them.



Abelardo Limon Jr., a lawyer in Brownsville, Tex., who represents some of the plaintiffs, said he first thought Wells Fargo had made a clerical error. Then he saw another case.

“When I realized it was a pattern of filing false documents with the federal court, that was appalling to me,” Mr. Limon said in an interview. The unauthorized loan modifications “really cause havoc to a debtor’s reorganization,” he said.

This is not the first time Wells Fargo has been accused of wrongdoing related to payment change notices on mortgages it filed with the bankruptcy courts. Under a settlement with the Justice Department in November 2015, the bank agreed to pay $81.6 million to borrowers in bankruptcy whom it had failed to notify on time when their monthly payments shifted to reflect different real estate taxes or insurance costs.

That settlement — in which the bank also agreed to change its internal procedures to prevent future violations — affected 68,000 homeowners.