Wells Fargo & Co (WFC.N) admitted to deceiving the U.S. government into insuring thousands of risky mortgages, as it formally reached a record $1.2 billion settlement of a U.S. Department of Justice lawsuit.
The settlement with Wells Fargo, the largest U.S. mortgage lender and third-largest U.S. bank by assets, was filed on Friday in Manhattan federal court. It also resolves claims against Kurt Lofrano, a former Wells Fargo vice president.
According to the settlement, Wells Fargo “admits, acknowledges, and accepts responsibility” for having from 2001 to 2008 falsely certified that many of its home loans qualified for Federal Housing Administration insurance.
The San Francisco-based lender also admitted to having from 2002 to 2010 failed to file timely reports on several thousand loans that had material defects or were badly underwritten, a process that Lofrano was responsible for supervising.
According to the Justice Department, the shortfalls led to substantial losses for taxpayers when the FHA was forced to pay insurance claims as defective loans soured.
Several lenders, including Bank of America Corp (BAC.N), Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE) and JPMorgan Chase & Co (JPM.N), previously settled similar federal lawsuits.
But Wells Fargo held out, and its payment is the largest in FHA history over loan origination violations.
Friday’s settlement is a reproach for “years of reckless underwriting” at Wells Fargo, U.S. Attorney Preet Bharara in Manhattan said in a statement.
“While Wells Fargo enjoyed huge profits from its FHA loan business, the government was left holding the bag when the bad loans went bust,” Bharara added.
The accord also resolved a probe by federal prosecutors in California of alleged false loan certifications by American Mortgage Network LLC, which Wells Fargo bought in 2009.
No one has been criminally charged in the probes, and the Justice Department reserved the right to pursue criminal charges if it wishes, according to the settlement.
Franklin Codel, president of Wells Fargo Home Lending, in a statement said the settlement “allows us to put the legal process behind us, and to focus our resources and energy on what we do best — serving the needs of the nation’s homeowners.”
Lewis Liman, a lawyer for Lofrano, did not immediately respond to requests for comment.
Wells Fargo on Feb. 3 said the settlement would reduce its previously reported 2015 profit by $134 million, to account for extra legal expenses.
The case is U.S. v. Wells Fargo Bank NA, U.S. District Court, Southern District of New York, No. 12-07527.
(Reporting by Jonathan Stempel and Nate Raymond in New York; Editing by Dan Grebler)
4 thoughts on “Wells Fargo admits deception in $1.2 billion U.S. mortgage accord”
N.B. All warfare is based on deception. THE ART OF WAR, Sun Tzu, Ch. 1, 18 (China, circa 770 BC);
ORS 164.085 [1971 c.743 s.128; 1991 c.837 s.10] (Theft by deception) (1) A person, who obtains property of another thereby, commits theft by deception when, with intent to defraud, the person: (a) Creates or confirms another’s false impression of law, value, intention or other state of mind which the actor does not believe to be true; or (b) Fails to correct a false impression which the person previously created or confirmed; or (c) Prevents another from acquiring information pertinent to the disposition of the property involved; or (d) Sells or otherwise transfers or encumbers property, failing to disclose a lien, adverse claim or other legal impediment to the enjoyment of the property, whether such impediment is or is not valid, or is or is not a matter of official record; or (e) Promises performance which the person does not intend to perform or knows will not be performed. (2) “Deception” does not include falsity as to matters having no pecuniary significance, or representations unlikely to deceive ordinary persons in the group addressed. For purposes of this subsection, the theft of a companion animal, as defined in ORS 164.055, or a captive wild animal is a matter having pecuniary significance. (3) In a prosecution for theft by deception the defendant’s intention or belief that a promise would not be performed shall not be established by or inferred from the fact alone that such promise was not performed. (4) In a prosecution for theft by deception committed by means of a bad check, it is prima facie evidence of knowledge that the check or order would not be honored if: (a) The drawer has no account with the drawee at the time the check or order is drawn or uttered; or (b) Payment is refused by the drawee for lack of funds, upon presentation within 30 days after the date of utterance, and the drawer fails to make good within 10 days after receiving notice of refusal. [1971 c.743 s.128; 1991 c.837 s.10]
“Well there’s no doubt that they’re guilty, and they’ll feel the full weight of the law when we slap them with this $100 dollar fine.” — Justice department whore.
When I got a home loan is 2007, I was offered a lier loan, did not have to say I had a job, did not have to tell them my income and get a credit score. All I have to do was pay 1% higher rate. The loan person told me that every bank was doing it because all loans did not stay with the bank, they went to the feds. So if I default it is a fed problem and the bank is out of the picture.
Don’t forget they where convicted of laundering mexican drug cartel money too!.
Get your money out of Wells Fargo.
They own the mortgage on the house I walked from in Vegas last may in 2015.
They are as crooked as the sun shines everyday.
Sending me threatening certified mail every week.
I think I’m up to about 14k they think I owe them.
In fact I’m gonna burn their threats in the burn barrel tomorrow and they’re agents collection threats.
They were paid off by the taxpayers in 08.
The main stakeholders in Fannie and Freddie mac were the Chinese.
If they want their money…come get it you crooks.
I’ve already dug a mass grave for you fkng vampires.