Magazine article Mortgage Banking

Wells Finalizes $1.2 Billion Settlement

Magazine article Mortgage Banking

Wells Finalizes $1.2 Billion Settlement

Article excerpt

Wells Fargo Bank, San Francisco, settled civil mortgage fraud claims and agreed to pay the government $1.2 billion over Federal Housing Administration (FHA) loans that Wells certified were eligible for FHA insurance. The Department of Justice (DOJ) announced the final terms of the settlement on April 8. [paragraph] DOJ noted in a press release that the FHA loans were approved by Wells Fargo under the FHA's Direct Endorsement Lender Program, which gives lenders the delegated authority to originate, underwrite and certify FHA loans for insurance.

DOJ's press release states that Wells agreed to pay $1.2 billion to settle charges that the lender certified "to the Department of Housing and Urban Development (HUD) during the period from May 2001 through December 2008 that certain residential home mortgage loans were eligible for FHA insurance when in fact they were not, resulting in the government having to pay FHA insurance claims when some of those loans defaulted."

Commenting on the settlement the day it was announced, Franklin Codel, president of Wells Fargo Home Lending, said, "Today's court filing details a previously announced agreement in principle that resolves not only the pending lawsuit filed by the U.S. Attorney for the Southern District of New York, but also a number of other potential claims going back as far as 15 years in some cases." Codel added, "It 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. …

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