Wells Fargo sued for mortgage fraud

Justin Sullivan/Getty Images

The U.S. Attorney in Manhattan filed a mortgage fraud lawsuit against Wells Fargo Bank Tuesday, alleging that the bank's "reckless loan origination" cost the government hundreds of millions of dollars in federal insurance payments.

At the heart of the complaint are Federal Housing Administration guarantees that cover mortgage loan losses on FHA-insured loans, as long as a series of underwriting guidelines are met. The government's complaint charges that the bank hid evidence of its failure to meet the requirements of the insurance program, in order to issue an increasing volume of government-insured loans. That would ensure that the bank would profit, while the government suffered the losses that the bank's shoddy underwriting caused.

"Wells Fargo's bonus incentive plan -- rewarding employees based on the sheer number of loans approved -- was an accelerant to a fire already burning, as quality repeatedly took a back seat to quantity," said Manhattan U.S. Attorney Preet Bharara in a prepared statement.

• U.S. backs lawsuit against JPMorgan
• JPMorgan sued over Bear Stearns securities
• Wells Fargo to pay $6.58M to settle SEC charges

Wells Fargo spokeswoman Mary Eshet denied the allegations in a written statement, saying that the bank believes it acted in good faith and in compliance with housing laws and regulations. The investigation that led to the suit was disclosed in Wells Fargo's second-quarter financial statements, filed with the Securities and Exchange Commission, she said.

This financial statement lists several pending legal actions and investigations that Wells Fargo estimated could cost the bank as much as $1.2 billion.

The U.S. Attorney did not specify exact damages, but said the government's losses amounted to "hundreds of millions" of dollars and the relevant law allows the government to seek triple damages.

[Sharonwah]

All remaining equity is inherited by the estate. The estate is not personally liable if the home sells for less than the balance of the reverse mortgage.

Thanks for share this.
http://www.reversemortgagelendersdirect.com/

[TJphoto]

"I'M SHOCKED"! To think a financial institution here in America could do this. Thank God no one is going to jail. Now about those pesky regulations.

[joey98282]

Funny comment considering this concerns Well's Fargo's actions before 2008.

Why do you try to blame President Obama for everything since Eve ate the Apple in the Garder of eden? Why?

Are you really that misinformed or do you just Love to be a LIAR?

Which is it??

[JdeanD]

Obama promised he'd reform the system and bring the guilty to justice.

He's protected the fraudulent system and the crooks instead.

[Lucky12345678]

Just one more example of how the Obama administration is growing our economy!!! Why isn't Jon Corzine in jail, because he's a Democrat...