U.S. Sues Wells Fargo Over Alleged Civil Mortgage Fraud

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Federal prosecutors filed a civil lawsuit against Wells Fargo Tuesday, according to The Huffington Post.

Wells Fargo reportedly "lied about the quality of loans certified for a federal insurance program", ultimately costing the country $190 million in claims. The bank concealed the quality of 6,320 loans in total, even after its own risk department conducted reviews.

This lawsuit continues a troubling trend of high-profile banks failing to disclose their mistakes.

"As the complaint alleges, yet another major bank has engaged in a long standing and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance," said Manhattan U.S. Attorney Preet Bharara.

Citigroup, Flagstar Bank, Bank of America, Deutsche Bank, and FBC have all repaid the Federal Housing Administration, a divison of the Department of Housing and Development, $1 billion collectively because in similar cases to that of Wells Fargo.

Essentially in Wells Fargo's situation, the bank's brokers issued loans that should not have qualified and the bank then lied about it to the government. The bank apparently gave bonuses to brokers who had a large number of approved loans.

According to a Wells Fargo spokesman, the bank is proud of its long-standing relationship with the FHA and will "vigorously defend itself against this action."

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This page contains a single entry by slee0014 published on October 9, 2012 10:21 PM.

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