Settling claims that stem from an intense period of mortgage fraud, Wells Fargo has agreed to pay 1.2 Billion dollars in the wake of a major US Lawsuit. The Lawsuit, filed in Federal court details misconduct riddled throughout the counties largest mortgage lender and the subsequent practices they implemented during a period of time between 2001 and 2005. The “reckless” underwriting policies include a failure to report over 6,000 loans from 2002 to 2010 that simply did not meet regulatory standards. Failure to review these deals led to a slew of early payment defaults. Brought to court by Preet Bharara of Manhattan, this is just one of the many similar suits following the fallout from mortgages insured through the Federal Housing Administration, or FHA.
Banks including Bank of America, Citigroup and Dutsche Bank AG have had resolved similar claims, issuing hundreds of millions of dollars. According to Wells Fargo, the settlement was reached on February 1st and would simultaneously resolve claims by the US Attorney’s Office in San Francisco and the U.S. Department of Housing and Urban Development. Aside from naming the Large Mortgage Lender as a defendant, the civil lawsuit has named a Kurt Lofrano. Mr. Lofrano, a vice president at the Wells Fargo is said to have played a critical role in not disclosing the loans. At this point in time it is unclear if the settlement terms applied to Mr. Lofrano, Mr. Bharara commented in a letter the deal resolves “all claims in this matter.”