Tags: wells fargo | mortgage | SEC | wells

Wells Fargo May Face Federal Charges over Mortgage Bonds

Tuesday, 28 February 2012 07:10 PM

Wells Fargo & Co could face a federal enforcement action related to disclosures it made in offering documents for mortgage-backed securities, the bank said in a securities filing Tuesday.

The disclosure is the latest sign that government officials are stepping up action against banks that packaged home loans into bonds during the housing boom. The underlying mortgages later soured, spurring billions in losses for investors.

Wells Fargo said it received a so-called Wells notice from the staff of the Securities and Exchange Commission, an indication the agency plans to bring charges. Spokespersons for Wells Fargo and the SEC declined comment.

Last month, the Obama administration set up a special task force to investigate practices related to mortgage-backed securities. A settlement this month with five major banks, including Wells Fargo, over foreclosure-related abuses allows probes of mortgage bonds to go forward.

In Tuesday's filing, Wells, the fourth-largest U.S. bank by assets, said it also faces investigations related to home loan origination practices. The bank said it continues to provide information requested by various agencies in certain investigations.

San Francisco-based Wells is the largest originator of mortgages in the United States.

Last week, Citigroup Inc said it received a subpoena from federal and state regulators seeking information about the bank's "issuing, sponsoring, or underwriting" of mortgage-backed securities.

The inquiries included a subpoena from the civil division of the U.S. Department of Justice, which Citigroup received on Jan. 27, it said in its annual report. That same day Attorney General Eric Holder said the department had issued civil subpoenas to 11 financial institutions as part of a new effort to investigate misconduct in the packaging and sale of home loans to investors.

In its annual report filing last week, Bank of America Corp said it has "received a number of subpoenas" from regulators and other authorities about the bank's underwriting and issuance of mortgage-backed securities.

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Tuesday, 28 February 2012 07:10 PM
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