Largest US lender sued for misconduct
The government has filed a civil mortgage fraud lawsuit against Wells Fargo for more than 10 years of alleged misconduct related to government-insured federal housing administration loans.
It is alleged the FHA paid hundreds of millions of dollars on insurance claims on thousands of defaulted mortgages due to false certifications by Wells.
Manhattan US 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.”
Between May 2001 and October 2005, according to the complaint, Wells certified more than 100,000 loans for FHA insurance, even though the bank knew its underwriters had failed to verify information that was directly related to the borrower’s ability to make payments.
Wells denied the allegations and said in a statement it believes it acted in good faith and in compliance with FHA and US Department of Housing and Urban Development rules.
Wells said it will vigorously defend itself against the suit.