Tags: Wells Fargo | home | loans | mortgage

Wells Fargo Needs to Answer for Bad Home Loans, US Says

Tuesday, 13 May 2014 01:52 PM

Wells Fargo & Co.’s $5 billion payment two years ago in a national mortgage settlement was for loan servicing abuses, and the bank still needs to answer for making bad government-insured loans, a U.S. Justice Department lawyer told a federal appeals court.

The court should reject the bank’s arguments that the national agreement limits new claims, department attorney Lindsey Powell said.

“All of the loans at issue in that case contain material violations” of underwriting standards and other mortgage regulations and are fair game for the government, Powell said.

Douglas Baruch, an attorney for Wells Fargo, disputed Powell’s assertion, arguing that the government’s case relies on compliance reports to federal agencies for which the bank received immunity from further suits.

“They’re seeking to impose liability on Wells Fargo based solely on annual certifications,” Baruch said.

He urged the panel to order U.S. District Judge Rosemary Collyer, who is overseeing the national settlement, to reconsider her ruling that it doesn’t offer protection against the allegations in the New York case, filed in October 2012.

Harm’s Cause

The judges repeatedly questioned the lawyers in an effort to determine how much harm resulted from misconduct in processing individual loans and how much resulted from reliance on fraudulent Wells Fargo compliance reports, in which the bank told the government it had safeguards in place to properly run a program for Federal Housing Administration-insured loans.

Lawyers for Wells Fargo, the most profitable bank in the U.S. last year, said in court papers that the New York suit was a “brazen attempt” to impose “massive fraud liability” only six months after it agreed to payments in the national accord.

Wells Fargo was one of five banks that agreed in 2012 to the $25 billion nationwide settlement with the Justice Department over mortgage wrongdoing that included botched foreclosures. The FHA then took additional action against four of the banks, including Wells Fargo, for related housing-crisis wrongdoing.

Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. decided to settle those matters. San Francisco-based Wells Fargo chose to fight.

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Wells Fargo & Co.'s $5 billion payment two years ago in a national mortgage settlement was for loan servicing abuses, and the bank still needs to answer for making bad government-insured loans, a U.S. Justice Department lawyer told a federal appeals court.
Wells Fargo, home, loans, mortgage
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2014-52-13
Tuesday, 13 May 2014 01:52 PM
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