Wells Fargo Lawsuit: U.S. Sues Bank Alleging Civil Mortgage Fraud

The United States Department of Justice filed a lawsuit October 9, 2012 against Wells Fargo Bank alleging it engaged it reckless lending practices in making risky loans that were guaranteed by FHA. The loans eventually defaulted at a high rate costing the government $190 million.

The Government alleges that from Jan. 1, 2002 through Dec. 31, 2010, Wells Fargo intentionally concealed problems with 6,320 loans it had determined were “seriously deficient” from the Federal Housing Administration, which insured the loans; the bank 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. The lawsuit further alleges that the problem was exacerbated by the bank giving its brokers incentives linked to quantity of loans made, causing quantity to take precedent over quality in making loans.

http://www.huffingtonpost.com/2012/10/09/wells-fargo-lawsuit_n_1952216.html

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Filed under Bank Fraud, FHA, Wells Fargo

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