The government has filed a lawsuit in federal court against Wells Fargo, alleging the nation’s largest mortgage lender has engaged in a decade of regular “reckless origination and underwriting” of government-backed loans.
The government’s lawsuit is the latest in its broad sweep against banks that cites the Federal False Claims Act, which targets lenders accused of misusing Federal Housing Administration loans. (The FHA does not make loans but insures loans that lenders make.)
Wells Fargo denies any wrongdoing and said it would “vigorously” defend itself against the government’s accusations. Company officials said they acted in “good faith and in compliance” with federal guidelines in their lending.
In February, Bank of America, which never admitted any wrongdoing, reached a $1 billion settlement involving False Claims Act fraud allegations with FHA-backed loans. Three other banks, in similar recent cases, also have agreed to pay $490 million.
Source: “U.S. Sues Wells Fargo for Faulty Mortgages,” The Wall Street Journal (Oct. 9, 2012)
The government’s lawsuit is the latest in its broad sweep against banks that cites the Federal False Claims Act, which targets lenders accused of misusing Federal Housing Administration loans. (The FHA does not make loans but insures loans that lenders make.)
Wells Fargo denies any wrongdoing and said it would “vigorously” defend itself against the government’s accusations. Company officials said they acted in “good faith and in compliance” with federal guidelines in their lending.
In February, Bank of America, which never admitted any wrongdoing, reached a $1 billion settlement involving False Claims Act fraud allegations with FHA-backed loans. Three other banks, in similar recent cases, also have agreed to pay $490 million.
Source: “U.S. Sues Wells Fargo for Faulty Mortgages,” The Wall Street Journal (Oct. 9, 2012)
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