Multi-Industry Chief Compliance and Ethics Officers

U.S. Sues Wells Fargo, Accusing It of Lying About Mortgages

  • 1.  U.S. Sues Wells Fargo, Accusing It of Lying About Mortgages

    Posted 10-10-2012 08:36 AM
    This message has been cross posted to the following eGroups: Financial Compliance and Multi-Industry Chief Compliance and Ethics Officers .
    By PETER LATTMAN, New York Times

    United States prosecutors sued Wells Fargo on Tuesday, accusing it of lying about the quality of the mortgages it handled under a federal housing program. It was the latest in a series of lawsuits related to banks' lending practices during the housing boom.

    In a lawsuit filed in Federal District Court in Manhattan, the prosecutors accused Wells Fargo, the country's largest originator of home loans, of defrauding the government for more than a decade. The bank recklessly issued mortgages and then made false certifications about their condition to the Federal Housing Administration, a government agency that insured them, the complaint said.

    The problematic loans were not eligible for the government insurance, according to the lawsuit, and when they soured, the F.H.A. was obligated to cover the losses. The Justice Department is seeking hundreds of millions of dollars in damages.

    "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," Preet S. Bharara, the United States attorney in Manhattan, whose office filed the lawsuit, said in a statement.

    Wells Fargo denied the accusations, saying that it had acted in good faith and in compliance with the F.H.A. program.


    Thank you,

    Eric Newman, Esq., CCEP
    Social Media Manager
    (952) 405-7938
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