Feds Sue Wells Fargo Over Mortgages
Bank accused of knowingly making reckless loans
By Newser Editors and Wire Services
Posted Oct 9, 2012 6:32 PM CDT
In this May 6, 2012, file photo, a Wells Fargo sign is displayed at a branch in New York.    (CX Matiash)

(Newser) – The US government has sued Wells Fargo in a New York court, accusing America's largest mortgage lender of misrepresenting the quality of thousands of loans in order to be eligible for federal loan insurance. The lawsuit, filed today in federal court in Manhattan, seeks to recover "hundreds of millions of dollars" that the Federal Housing Administration paid out after borrowers defaulted on Wells Fargo mortgage loans. The bank denied the charges and promised a vigorous defense.

Wells Fargo had applied for FHA insurance for the loans, meaning that if the loans went bad, the bank could ask the government to pay for costs associated with the defaulted mortgages. The lawsuit charges that Wells Fargo falsely certified that some loans were eligible for government insurance when they actually weren't. Specifically, it alleges that between May 2001 and October 2005, Wells Fargo certified that more than 100,000 mortgage loans were eligible for the insurance. But "a very substantial percentage of those loans," nearly half in some months, were not up to snuff, according to the lawsuit. Last week, the government went after JPMorgan Chase for its practices during the housing boom and bust.

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Showing 3 of 27 comments
Bundy714
Oct 10, 2012 11:37 AM CDT
Prosecuting Chase and Wells Fargo sounds good, but we all know that nothing will come of it. Either they will argue they made a mistake, or they will sacrifice a low level person and blame it all on them. The organizers and ones that made the most on this fraud will never be prosecuted. And IF, and that's a big IF, they do win a conviction, we know the fine will be a 1/10th or less of the money they actually bilked from the Feds. Just a cost of doing business, when the business you are doing is fraud and theft.
Antagonist
Oct 10, 2012 5:03 AM CDT
Just"Hundreds of Millions" ???? How about Tens of Billions to teach them a FUCKING lesson. They make hundreds of millions each month on the interest that we account holders have deposited in banks. And the bank makes it look like they are doing "US" a "Favor" by giving us Free checking and jacked up credit card rates!
$4565535
Oct 9, 2012 11:20 PM CDT
Thank you Obama, for doing the job Republicans are too dishonorable to do.