U.S. sues Wells Fargo over thousands of loan defaults
Spencer Platt/Getty Images
NEW YORK The federal government has sued Wells Fargo Bank (WFC) in New York, blaming the nation's largest originator of home mortgages for thousands of loan defaults over the last decade.
A civil mortgage fraud lawsuit filed in U.S. District Court in Manhattan on Tuesday seeks to recover hundreds of millions of dollars that the Federal Housing Administration, which insured the loans, had to pay out after borrowers defaulted.
The lawsuit charges San Francisco-based Wells Fargo with falsely certifying that its loans met the standards necessary to be eligible for government insurance. U.S. Attorney Preet Bharara says the bank's plan to reward employees for the number of loans they approved "was an accelerant to a fire already burning."
- U.S. backs lawsuit against JPMorgan
- JPMorgan sued over Bear Stearns securities
- Wells Fargo to pay $6.58M to settle SEC charges
This marks the fifth lawsuit that the government has brought against major lenders over mortgage practices.
Wells Fargo has denied the allegations and is promising a vigorous defense.
Popular on MoneyWatch
- Reverse cell phone lookup service is free and simple
- Chrysler expected to make Jeep recall refusal official
- 6 ways to pay off your student loans
- Chrysler agrees to recall of Jeeps at risk of fire
- Why geniuses don't have jobs
- The Internship: 6 real-life lessons from the movie
- Chrysler continues its refusal to issue a Jeep recall
- Top 10 professional life coaching myths