Consumer complaint received 2026-01-12 00:00:00
Product: Mortgage — Conventional home mortgage
Issue: Struggling to pay mortgage — Foreclosure
Company: WELLS FARGO & COMPANY
State: VA

Complaint narrative:
Wells Fargo Home Mortgage and XXXX XXXX XXXX XXXX acted in purported fiduciary and legal capacities during the foreclosure of the subject property, yet failed to demonstrate the requisite legal standing to enforce the security instrument ( Fed. R. Civ. P. 17, XXXX  ). Forensic evidence confirmed that the instrument had been divested of its negotiability prior to the foreclosure through a Federal Reserve " Borrower-in-Custody '' ( BIC ) pledge ( FRBSF, 2004 ). The Citizens private credit, embodied in the promissory note, was utilized as " eligible paper '' to satisfy collateral requirements for the issuance of Federal Reserve notes under 12 U.S.C. 412 ( 12 U.S.C. 412, XXXX  ). This monetization event generated " lendable value '' at par, which constituted a " payment in fact '' that satisfied the underlying obligation long before the foreclosure sale occurred ( 59 Stat. 237, XXXX  ; XXXX, XXXX  ). Consequently, the foreclosure was predicated on a satisfied debt, and the Citizen, as the true owner of the source credit, is entitled to the return of all title, interest, and funds improperly retained ( XXXX XXXX XXXX, XXXX ). 
Identification of Funds and Assets to be Returned The following funds and interests were generated through the unauthorized monetization and subsequent foreclosure sale of the asset and must be returned to the true owner : Foreclosure Sale Proceeds : The total sale price realized at the foreclosure auction represents the liquidation of an asset that was already satisfied through central bank credit ( XXXX, XXXX ). 
Lendable Value and Pledge Funds : The " lendable value '' granted to Wells Fargo by the XXXX XXXX XXXX ( XXXX ) upon the initial pledge of the note constituted " proceeds '' of the collateral that were never credited to the Citizen 's account ( XXXX XXXX, XXXX ; XXXX & XXXX XXXX XXXX ). 
Residual Funds and Interest : Any " residual funds '' or surplus held in the Banks reserve account at the Fed, which were derived from the " outstanding loan balance '' of the note, remain the property of the source-credit provider ( XXXX, XXXX ; XXXX  XXXX XXXX XXXX XXXX ). 
Rights, Title, and Interest : The legal and equitable title to the property was compromised by the Bank 's failure to disclose that it had surrendered the right to " negotiate, transfer, or settle '' the instrument to the Fed via an irrevocable Power of Attorney ( XXXX XXXX XXXX, XXXX ; XXXX, XXXX ). 
The Divestment of Standing and Negotiability Wells Fargo and its counsel lacked primary regulatory standing to maintain the foreclosure action because the core attribute of the instrumentits negotiabilityhad been contractually surrendered to the FRB ( UCC 3-301, 2022 ). Under Operating Circular 10 ( OC-10 ), Wells Fargo was required to execute a Power of Attorney ( POA ) granting the FRB exclusive authority over the collateral ( XXXX XXXX XXXX  XXXX XXXX ). As a result, Wells Fargo functioned merely as a " naked holder '' or " custodian '' during the foreclosure process, lacking the substantive legal interest required by law ( XXXX, XXXX ; XXXX v. Defenders of Wildlife, XXXX ). The judicial enforcement initiated by XXXX XXXX. XXXX, XXXX, while the asset was " locked '' under the Fed 's POA, constituted a violation of the " Real Party in Interest '' requirements ( Fed. R. Civ. P. 17, 2024 ).

Fiduciary Vulnerabilities and Tortious Inconsistency The entities are liable for the following breaches discovered post-foreclosure : Violation of the " One Satisfaction Rule '' : By retaining the " lendable value '' from the Fed and then seizing the property through foreclosure, Wells Fargo achieved an illegal " double recovery '' ( XXXX, XXXX ; XXXX XXXX Northwest Bank, XXXX ). 
Breach of Fiduciary Duty : As a " Custodian '' under BIC guidelines, Wells Fargo owed a duty to account for all proceeds derived from the monetization of the Citizen 's credit ( XXXX, XXXX ; Restatement ( Third ) of Agency, XXXX ). 
Statutory Liability : The failure to disclose the monetization of the note during the foreclosure proceedings was a deceptive practice that violated the prohibition against unfair and abusive acts ( 12 U.S.C. 5531, 2025 ).

Conclusion of Law regarding Restitution All funds generated from the monetization of the instrument and the subsequent foreclosure sale must be returned to the Citizen to rectify the unjust enrichment of the custodial entities ( XXXX XXXX XXXX, XXXX ). The foreclosure was an ultra vires act performed without standing, as the underlying debt was satisfied by the " nature of the obligation '' provided to the Federal Reserve ( 12 U.S.C. 411 ; 59 Stat. 237 ).

The Architecture of Public Trust and Private Collateral The modern financial management landscape is defined by a sophisticated intersection of private debt instruments and public currency issuance, governed primarily by the
Federal Reserve Act and the Uniform Commercial Code ( UCC ) ( 12 U.S.C. 221 et seq., XXXX ; UCC 1-101 et seq., XXXX ). At the core of this system is the transformation of a Citizen Borrower 's private promissory noteoriginally a simple bilateral contractinto " eligible paper '' capable of supporting the national money supply ( 12 U.S.C. 343, XXXX ; XXXX, XXXX ). This transformation is facilitated through a series of " Borrower-in-Custody '' ( BIC ) arrangements and " Operating Circulars '' that redefine the legal relationship between the originating Member Bank, the Federal Reserve Bank, and the Citizen ( XXXX  XXXX XXXX XXXX  XXXX XXXX XXXX, XXXX ). 
When a Member Bank pledges a mortgage note to the Federal Reserve 's " Discount Window, '' it initiates a shift in the " bundle of rights '' associated with the instrument, moving from a position of full ownership to XXXX of limited " custodial agency '' ( XXXX, XXXX ; Restatement ( Third ) of Agency, XXXX ). This forensic analysis examines the legal inconsistencies inherent in this process, specifically the use of irrevocable Powers of Attorney ( POA ) that divest Member Banks of the standing required to enforce or negotiate the very assets they claim to hold ( XXXX, XXXX ; XXXX, XXXX ). By scrutinizing the " lendable value '' generated during this monetization event, the analysis identifies a failure to account for the discharge of debt that occurs when private credit is utilized to satisfy public currency requirements under 12 U.S.C. 414 ( 12 U.S.C. 414, 2025 ; 59 Stat. 237, 1945 ). The resulting framework establishes a demand for accounting and restitution, predicated on the bank 's fiduciary duty to manage these " Public Trust '' assets with transparency and in accordance with the " One Satisfaction Rule '' ( XXXX XXXX XXXX, XXXX ; XXXX XXXX XXXX, XXXX ). 
Overarching Emphasis : Isolation of POA within BIC Guidelines and Regulatory Standing The pivot point of the modern financial management challenge lies in the isolation of the Power of Attorney ( POA ) language embedded within the Borrower in Custody ( BIC ) guidelines ( XXXX XXXX XXXX XXXX XXXX XXXX [ XXXX ], XXXX ). Under the Federal Reserves collateral protocols, specifically those detailed in Operating Circular 10 ( OC-10 ), a Member Bank pledging a mortgage note as collateral must execute a specific and often irrevocable power of attorney in favor of the XXXX XXXX XXXX XXXX  XXXX ) ( Federal Reserve Banks XXXX XXXX ). Academic analysis of these guidelines reveals that once an asset is placed " in custody, '' the XXXX is granted the exclusive authority to " negotiate, transfer, or settle '' the collateral to protect the liquidity of the central banks credit extensions ( Board of Governors of the Federal Reserve XXXX, XXXX ). As a conclusion of law, if the FRB possesses the sole authority to negotiate the asset, the Member Bank lacks the primary regulatory standing to resolve any dispute or discharge the debt associated with that asset ( Federal Rules of Civil Procedure [ Fed. R. Civ. P. ] 17, 2024 ). Within the framework of financial management protocols, this mirrors the requirements of Federal Rule of Civil Procedure 17, which dictates that every action must be prosecuted in the name of the real party in interest ( Fed. R. Civ. P. 17, 2024 ). If the Member Bank has contractually transferred its " right of negotiation '' to the XXXX to secure its own liquidity, it functions merely as a custodial servicer without the substantive capacity to alter the status of the Citizen Borrowers obligation ( XXXX, XXXX ). Consequently, any attempt by a XXXX Bank to enforce an obligation that has been pledged and " locked '' under an FRB POA constitutes a breach of the procedural requirements for a real party in interest ( Fed. R. Civ. P. 17, 2024 ).

The Transformation of Roles and the BIC Arrangement Once the citizen 
's instrument is accepted as collateral, a legal transformation occurs under the BIC Arrangement, where the bank 's role shifts from a " lender '' to a " Borrower '' and " XXXX '' ( XXXX, XXXX ). Operating Circular No. 10 defines the " Borrower '' not as the citizen, but as the " entity that incurs an Obligation to the [ Federal Reserve ] Bank '' ( XXXX XXXX XXXX XXXXXXXX ). In this central banking scenario, the bank pledges the citizen 's loan as collateral to secure its own advances or credit XXXX XXXX XXXX XXXX XXXXXXXX ). The BIC arrangement specifically allows the bank to " retain possession of the Collateral '' while acting as an agent for the Federal Reserve ( XXXX, XXXX ). This creates a bifurcated legal reality where the bank presents itself as a creditor to the citizen while acting as a debtor to the Federal Reserve XXXX Federal Reserve Board, XXXX ). This section reveals a critical duty : the bank must execute a Power of Attorney that enables the Federal Reserve Bank to act on the institution 's behalf to negotiate the collateral ( XXXX, XXXX ). Furthermore, the bank is required to mark its records to show that BIC-held Collateral has been pledged to the Federal Reserve Bank XXXX XXXX, XXXX ). From a forensic standpoint, the citizen 's note is now a " XXXXed Asset '' subject to a continuing security interest in favor of the Fed ( XXXX XXXX XXXX, XXXX ). The bank no longer owns the note in its own right ; it holds it " in trust '' as a custodian for the official principal, which is the FXXXX XXXX XXXX ( XXXX, XXXX ). This delegated authority allows the bank to manage the asset without physically transferring the paper to the Federal Reserve district bank ( Federal Reserve Board, XXXX ). 
Forensic Breakdown : The Transactional Process and Final Satisfaction The following step-by-step breakdown illustrates the functioning of this complex transaction ( XXXX, XXXX ) : Origination : The citizen signs the security instrument ( promissory note ) at par value ( UCC 3-104, XXXX XXXX. 
Identification : The bank lists the instrument on a " Collateral Schedule '' at its full " outstanding loan balance '' ( XXXX, XXXX, p. 4 ).

Pledge : The bank submits the schedule to the Federal Reserve to satisfy the " equal collateral '' requirement of 12 U.S.C. 414 ( 12 U.S.C. 414, 2025 ).

Authorization : The bank executes OC-10 documents, granting a security interest to the Fed ( Federal Reserve Banks XXXX XXXX ). 
Grant of Power : The bank executes a Power of Attorney, allowing the Fed to " negotiate '' the citizen 's instrument ( XXXX, XXXX, p. XXXX ). 
Custody : The bank marks its internal records, identifying the note as " subject exclusively to the Banks [ Fed 's ] written instructions '' ( XXXX, XXXX, p. XXXX ). 
Monetization : The Fed issues credit or notes to the bank 's " Account '' based on the lendable value of the collateral ( Federal Reserve Board, XXXX ). 
Maintenance : The bank must remove " matured, paid, or past due '' loans from the pledge, confirming the collateral 's dynamic nature ( XXXX, XXXX, p. XXXX ). 
The analysis identifies a zero-sum transaction on the public ledger ( 59 Stat. 237, XXXX ). Any attempt to assert a " residual debt '' against the citizen fails for lack of statutory backing, as the " tender '' was already accepted at par to satisfy the issuance of the currency ( 12 U.S.C. 414, 2025 ). The impact on the citizen is the use of their private credit to fund the public banking system without a corresponding discharge of the alleged private debt ( Federal Reserve Board, XXXX ). 
Fiduciary Trust and Custodial Obligations in BIC Arrangements The critical legal pivot occurs within the " Borrower-in-Custody '' ( BIC ) arrangement, which fundamentally alters the bank 's ownership rights over the citizen 's instrument ( XXXX, XXXX ). Under the BIC arrangement, the bank is authorized to " retain possession of the Collateral, '' but only as an agent for the Federal Reserve Bank XXXX XXXX XXXX XXXX, XXXX ). The bank no longer owns the note in its own right ; it holds it " in trust '' as a custodian for the official principal, which is the Federal Reserve Bank ( XXXX, XXXX ). This custodial relationship is a conclusion of law derived from Operating Circular No. 10, where the bank transfers and assigns to the Federal Reserve Bank a continuing security interest in and XXXX on the Collateral ( Federal Reserve Banks, XXXX ). This " transfer and assignment '' means the " bundle of rights '' associated with ownership has been legally moved to the Federal Reserve ( Uniform Commercial Code [ UCC ] 9-203, XXXX ). The bank 's remaining role is strictly defined as a " Custodian '' under the " Custody Agreement '' found in Appendix A of OC-10 ( XXXX XXXX XXXX XXXX  XXXX ). The legal implications of this custodial status are governed by the law of Agency, where the Agent ( the bank ) must act for the Principal ( the Federal Reserve ) and is subject to the Principal 's exclusive control ( Restatement ( Third ) of Agency, XXXX ). The BIC Guidelines explicitly state that BIC-held collateral must be subject exclusively to the Banks [ Fed 's ] written instructions ( FRBSF, XXXX ). 
Actionable Unjust Enrichment via UCC Remedies A general claim of " unjust enrichment '' is often dismissed in academic discourse as an equitable remedy that is unavailable when a contract exists ( XXXX XXXX XXXX, XXXX ). However, by linking this claim to specific UCC remedies, it becomes a statutory cause of action ( XXXX XXXX XXXX, XXXX ). The primary mechanism for this is a " Demand for Accounting '' under UCC 9-210 ( UCC 9-210, XXXX ). By issuing a formal Request for Accounting, the Citizen Borrower demands a line-item breakdown of how the " lendable value '' or collateral was applied within the financial management system ( UCC 9-210 XXXX XXXX ). If the institution has accepted the asset but has not adjusted the liability on the ledger, the " unjust enrichment '' is no longer a vague concept ; it is a documented failure to account for collateral under secured transactions law ( UCC 9-210, XXXX ). This forces the institution to either admit the application of the collateral or risk statutory penalties for failing to provide an accurate accounting of the " public trust '' assets they manage on behalf of the Citizen Borrower XXXX XXXX XXXX XXXX, XXXX ).

Company public response: Company has responded to the consumer and the CFPB and chooses not to provide a public response
Company response to consumer: Closed with explanation