Wells Fargo has reached a tentative $1.2-billion settlement with the federal government to resolve claims that it engaged in mortgage fraud and wrongful Federal Housing Administration (FHA) loan underwriting practices in the lead-up to the 2008 financial crisis and housing market crash. It's been a tough week for the San Francisco-based company, as just days ago, a California judge certified two class-action lawsuits accusing Wells Fargo of failing to meet its obligations to struggling borrowers who sought to modify their home loans. Now, the country’s largest mortgage lender said in a Feb. 1 Securities and Exchange Commission filing that it has reached "an agreement in principle” with the Department of Justice, the U.S. Attorney’s Offices for the Southern District of New York and the Northern District of California and the Department of Housing and Urban Development to pay $1.2 billion to resolve claims related to its FHA lending program. The various government...
- The government accused Wells Fargo of "reckless" lending practices during the housing market crisis, and said "pay up" to the tune of $1 billion-plus.
- The proposed settlement would put all claims against the company to rest, but Wells Fargo noted "there can be no assurance" that the agreement is final.
- Similar claims have been made against Bank of America, Citigroup and JPMorgan Chase, and they all settled -- leaving QuickenLoans more or less as the sole company still fighting this battle.
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