U.S. Sues Wells Fargo for Lying about “Seriously Deficient” Mortgages
Wells Fargo should have to pay for lying about bad home loans, according to a federal prosecutor who has sued one of the nation’s largest banks.
Manhattan U.S. Attorney Preet Bharara is going after Wells Fargo for concealing problems with more than 6,000 loans that it submitted to the Federal Housing Administration (FHA), which insures private lending. Calling the loans “seriously deficient,” Bharara said the government lost $190 million when the mortgages failed.
Bank officials at the nation’s largest home lender knew about the problems, according to the lawsuit, because their own risk department uncovered “a dirty underbelly of bad loan officers.”
Bharara said Wells Fargo “engaged in a long standing and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance.”
In addition to Wells Fargo, five other large financial institutions—Citigroup, Flagstar Bank, Bank of America, Deutsche Bank and FBC—have repaid a total of $1 billion to FHA to settle similar allegations.
To Learn More:
Wells Fargo Lawsuit: U.S. Sues Bank Alleging Civil Mortgage Fraud (by Ben Hallman, Huffington Post)
Wells Fargo Accused in U.S. Mortgage Fraud Lawsuit (by Andrew Tangel, E. Scott Reckard and Richard A. Serrano, Los Angeles Times)
U.S. Files Civil Mortgage Fraud Suit Against Wells Fargo (by Chris Dolmetsch and Dakin Campbell, Bloomberg BusinessWeek)
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