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Wells Fargo VP May Be Added to Mortgage-Fraud Suit

nasdaq.com | November 27, 2013

By Saabira Chaudhuri

The U.S. government filed a motion Friday to add a Wells Fargo & Co. executive in charge of quality control to a lawsuit accusing the biggest U.S. mortgage lender of "reckless" lending and leaving a federal insurance program to pick up the tab.

The action, filed in federal court in Manhattan, claims Vice President Kurt Lofrano-whose function included self- reporting materially defective loans to the U.S. Department of Housing and Urban Development-"concealed the bank's bad loans and shoddy underwriting to protect its enormous profits."

It says that before October 2005, Wells Fargo didn't self-report a single bad loan to HUD.

The government's motion aims to add Mr. Lofrano to the suit it filed in October 2012 under the Federal False Claims Act. That sought "hundreds of millions of dollars" in damages on behalf of the FHA, a government agency that doesn't make loans but insures those made by lenders that meet its standards.

The original complaint alleges nearly a decade of misconduct dating back to May 2001. The suit contends that San Francisco-based Wells Fargo engaged in "regular practice of reckless origination and underwriting" of government-backed loans. The company said more than 100,000 FHA loans met federal guidelines when more than half of them didn't, according to the complaint.

Wells Fargo denies the allegations. On Monday, the bank in an emailed statement said it is "very disappointed" by the government's motion, adding that "Wells Fargo has not been presented with any facts or circumstances warranting this action nor has the government explained why it is even remotely appropriate to include Mr. Lofrano more than a year after first filing suit."

A Wells Fargo spokesperson confirmed Mr. Lofrano is a vice president of credit risk with the company.

 

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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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