Homeowners, Wells Fargo head to trial over mortgage fees

(Repeats story sent earlier with no changes to text)

By Nate Raymond

NEW YORK, Dec 8 (Reuters) - Wells Fargo & Co, the largest U.S. mortgage lender, is set to go to trial on Monday as homeowners seek to recoup about $629 million for alleged overcharges by a company once owned by Wachovia Corp.

Jury selection is scheduled to begin in federal court in Manhattan in a long-running class-action lawsuit concerning HomEq Servicing, a subprime mortgage servicer.

The lawsuit was filed in 2001 on behalf of borrowers whose mortgages were owned or serviced by HomEq or the lender whose loans it was established to manage, Money Store.

Wachovia in 2006 sold HomEq to Barclays Plc (LSE: BARC.L - news) , which in turn in 2010 sold the mortgage servicing business to Ocwen Financial Corp.

Wells Fargo bought Wachovia at the end of 2008 and thus never owned HomEq, but a spokesman confirmed it remained liable for some claims raised in the lawsuit. Ocwen in a statement said it did not have similar liability. Barclays declined to comment.

The lawsuit filed by Joseph Mazzei, a California resident, contends that HomEq kept charging borrowers monthly late fees even after their mortgages went into default, making the full amounts owed immediately due.

It also said HomEq violated its contracts by charging attorneys' fees in foreclosure and bankruptcy and splitting them with a nonlawyer, specifically a unit of Fidelity National Information Services Inc (NasdaqGM: III - news) . Sharing fees in this manner is illegal throughout the country, the lawsuit said.

In an October court filing, a damages expert for the plaintiffs estimated damages at $59.3 million for late fees and $282.7 million for attorneys' fees, plus pre-judgment interest of $287.4 million.

"We strongly disagree with and dispute the plaintiff's claims and legal arguments, which relate to acts that occurred at a legacy company more than a decade ago, and are prepared to present our case in court." Wells Fargo spokesman Tom Goyda said.

Moshe Horn, a lawyer for the plaintiffs at Seeger Weiss, declined to comment.

The case is Mazzei v. The Money Store, U.S. District Court, Southern District of New York, No. 01-5694. (Reporting by Nate Raymond in New York; Editing by Jonathan Oatis)