Wells Fargo Agrees To Pay $1.2 Bln To Settle Mortgage Lending Practices Claims

(RTTNews) - The U.S. Department of Justice announced that the United States has settled civil mortgage fraud claims against Wells Fargo Bank, N.A. and Wells Fargo executive Kurt Lofrano, stemming from Wells Fargo's participation in the Federal Housing Administration (FHA) Direct Endorsement Lender Program.

In the settlement, Wells Fargo (WFC) agreed to pay $1.2 billion and admitted, acknowledged and accepted responsibility for, among other things, certifying to the Department of Housing and Urban Development (HUD), 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 agreement resolves the United States' civil claims in its lawsuit in the Southern District of New York, as well as an investigation conducted by the U.S. Attorney's Office for the Southern District of New York regarding Wells Fargo's FHA origination and underwriting practices subsequent to the claims in its lawsuit and an investigation conducted by the U.S. Attorney's Office for the Northern District of California into whether American Mortgage Network, LLC (AMNET), a mortgage lender acquired by Wells Fargo in 2009, falsely certified and submitted ineligible residential mortgage loans for FHA insurance.

The settlement was approved today by U.S. District Judge Jesse M. Furman for the Southern District of New York.

"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. 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. said Franklin Codel, president of Wells Fargo Home Lending.