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Wells Fargo in talks with government to resolve mortgage case

sltrib.com | November 7, 2014

By Deon Roberts

CHARLOTTE, N.C. - Wells Fargo said Wednesday it is in discussions with the U.S. government to possibly resolve a two-year-old mortgage fraud case.

The government filed the civil lawsuit in 2012 against the San Francisco-based lender, accusing it of "reckless" origination of government-backed home loans.

From 2001 to 2005, Wells certified that more than 100,000 loans met the U.S. Department of Housing and Urban Development’s origination and underwriting requirements, even though the bank knew a large percentage of them were not eligible for federal insurance, the lawsuit said.

When the loans went into default, the Federal Housing Administration was required to pay hundreds of millions of dollars in insurance claims for loans that did not qualify for federal insurance, the government claimed, among other things.

Shortly after the government’s complaint was filed in New York federal court, Wells Fargo filed a motion in Washington, D.C., federal court to be released from the claims but was denied. The bank appealed that decision in 2013 to a federal appeals court, but that attempt also failed.

In the securities filing Wednesday, Wells Fargo said it "is in discussions with the United States about a possible resolution."

The lender continues to fight other litigation, including a decision last month by federal appeals court in San Francisco in an overdraft fee case. The court said Wells Fargo must pay customers $203 million after it was accused of manipulating debit-card transactions to increase the fees.

In the securities filing Wednesday, Wells Fargo says it is "considering its options" in that case.

The bank also said in the securities filing that it has lowered its estimate for how much its legal costs could exceed the amount it has set aside to cover those expenses.

Wells said it could spend as much as $950 million above its reserves based on estimates at the end of September. The figure is a decrease from $1.2 billion at the end of June.

That decrease came as the bank resolved some of its largest outstanding legal issues in the quarter, including two Maryland class-action cases over mortgage practices

©2014 The Charlotte Observer (Charlotte, N.C.)


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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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