Wells Fargo & Co. has finalized a settlement tentatively reached two months ago with the government over allegations of reckless underwriting and fraudulent loan certifications on government-insured loans.
In February, Wells Fargo disclosed in a filing with the Securities and Exchange Commission that it had reached an agreement in principle for over $1 billion to settle a Justice Department Lawsuit filed in 2012.
The San Francisco-based company was accused of certifying 100,000 Federal Housing Administration-insured mortgages from May 2001 until October 2005 even though many shouldn’t have been certified.
On Friday, Wells Fargo announced
that it will pay $1.2 billion to settle the lawsuit.
“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,” Wells Fargo Home Lending President Franklin Codel said in the statement. “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.”
A separate news release from the
Justice Department indicated that the settlement covers civil mortgage fraud claims against Wells Fargo Bank, N.A., and Wells Fargo executive Kurt Lofrano, who was vice president of credit-risk – quality assurance.
The government said the Wells Fargo “admitted, acknowledged and accepted responsibility for, among other things, certifying to the Department of Housing and Urban Development, 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.”
The government added that between 2002 and 2010, even though Wells Fargo’s internal quality assurance reviews identified nearly 6,000 FHA loans with material findings, it only self-reported around 300 of those loans.
