Legal News

U.S. Government Sues Wells Fargo for Mortgage Fraud
Download PDF
1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

On Tuesday, the U.S. government filed a civil mortgage fraud lawsuit against Wells Fargo & Co. The complaint has been brought by the U.S. Attorney in Manhattan seeking damages and civil penalties for more than ten years of alleged misconduct in government-insured Federal Housing Administration loans.

According to the lawsuit, the Federal Housing Administration was compelled to pay hundreds of millions of dollars in insurance claims on defaulted mortgages upon false certifications by Wells Fargo. Manhattan U.S. Attorney Preet Bharara said, “As the complaint alleges, yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance.”

Wells Fargo, which is the fourth-biggest U.S. bank by assets, denied the allegations and claimed that it had acted in good faith and in compliance with FHA and the U.S. Department of Housing and Urban Development rules. The bank also maintains that many of the allegations have already been addressed with HUD and that the bank’s FHA delinquency rates are half that of the industry average.

  
What
Where


In the past few years, Bharara had successfully brought similar cases against large banks. CitiMortgage Inc, settled one for $158.3 million, and Deutsche Bank paid up $202.3 million in May. The biggest related case was brought by the U.S. Attorney’s office in Brooklyn against Bank of America Corp’s Countrywide, which agreed in February to pay $1 billion for resolving the allegations.

The suit against Wells Fargo has charges under the False Claims Act and under the Financial Institutions Reform, Recovery, and Enforcement Act. The FIRRE requires a lower burden of proof than under criminal statutes and has a longer statute of limitations than other financial laws.

According to the lawsuit, between May 2001 and October 2005, Wells Fargo certified more than 100,000 loans for FHA insurance, with full knowledge that its underwriters had failed to verify information directly related to the borrower’s ability to repay. The complaint mentions, “The extreme poor quality of Wells Fargo’s loans was a function of management’s singular focus on increasing the volume of FHA originations (and the bank’s profits), rather than the quality of the loans being originated.”

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!






 

RELEVANT JOBS

Paralegal

USA-IL-Fairview Heights

Candidate will assist two attorneys with workers compensation cases from the initial filing and reco...

Apply now

Director of Originations, Litigation Finance Investments

USA-TX-Dallas

Location is flexible nationwide -- NOT only Dallas. Job Summary Rapidly growing litigatio...

Apply now

Litigation Paralegal

USA-NY-Brooklyn

Ween & Kozek, PLLC is hiring. We are a boutique law firm focused on housing and tenants’ right...

Apply now

Trademark Paralegal / Legal Assistant

USA-FL-Miami

MAVEN IP is looking for a detail-oriented full-time paralegal assistant with experience and kno...

Apply now

BCG FEATURED JOB

Locations:

Keyword:



Search Now

Litigation Attorney/Landlord Tenant Associate

USA-MD-Baltimore

Baltimore office of a BCG Attorney Search Top Ranked Law Firm seeks litigation attorney/landlord ten...

Apply Now

Trial Associate Attorney

USA-GA-Atlanta

Atlanta office of our client seeks associate attorney with 2-4 years of trial experience. The ideal ...

Apply Now

Litigation Associate Attorney

USA-FL-West Palm Beach

West Palm Beach office of a BCG Attorney Search Top Ranked Law Firm seeks litigation associate attor...

Apply Now

SEARCH IN ARCHIVE

To Top