Monthly Archives: June 2014

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...
Read more Comments are closed

Wells Fargo Must Answer for Failed Home Loans, U.S. Says

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. Wells Fargo’s attempt to fend off a New York lawsuit alleging reckless loan origination mischaracterizes issues it raises as covered by the national settlement, Powell told a three-judge panel of the U.S. Court of Appeals today in Washington. “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...
Read more Comments are closed

BofA Unit

Charlotte, North Carolina-based Bank of America and its Countrywide unit agreed to pay $1 billion in February 2012, while New York-based Citigroup resolved its FHA suit the same month by paying $158.3 million. In February, New York-based JPMorgan agreed to pay $614 million to settle claims that it improperly approved FHA and Veterans Affairs loans. If Wells Fargo, which had $21.9 billion in net income last year, does eventually negotiate an end to the FHA case, the size of the settlement may resemble the JPMorgan deal, Miller said. There’s relatively little risk in the strategy, said Peter Henning, a former lawyer with the Securities and Exchange Commission and a professor at Wayne State University Law School in Detroit. “If you win, you save a lot of money,” Henning said. “And if you lose, you do what you would have done anyway.” The case in Washington is U.S. v. Bank of America, 13-5112, U.S. Court of Appeals, District of Columbia (Washington)....
Read more Comments are closed