Wells Fargo and Company (WFC), has agreed to pay $1.2 billion to resolve civil claims filed against it by the federal government relating to its Federal Housing Administration (FHA) lending program during the period from 2001-2010. Federal regulators brought a civil fraud lawsuit against Wells Fargo in 2012, accusing it of engaging in “reckless” underwriting that resulted in thousands of government-backed loans defaulting and hundreds of millions of dollars in insurance payments.
The FHA program gives lenders authority to certify that mortgages they underwrite meet requirements for federal insurance but if any of those federally-backed mortgage defaults, the US Department of Housing and Urban Development (HUD) must make insurance payouts to the holder of the loan. In other words, taxpayers are on the hook, not the banks, for the bad lending practices of banks.
The agencies with which Wells Fargo has reached agreement are the United States Department of Justice, the United States Attorney’s Office for the Southern District of New York, the United States Attorney’s Office for the Northern District of California, and the United States Department of Housing and Urban Development.
Read the original article in Big News Network.