Wells Fargo Contends Mortgage Suit Violates Settlement Terms
The FHA Condos Approval Company, Inc.
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The U.S. government is violating the terms of the national mortgage settlement with its recently filed lawsuit against Wells Fargo, attorneys for the bank argue.
The U.S. Attorney’s Office for the Southern District of New York filed suit against Wells Fargo in early October alleging “more than 10 years of misconduct” in connection with the bank’s participation in the Federal Housing Administration (FHA) Direct Endorsement Lender Program. The lawsuit alleges Wells Fargo misrepresented the underwriting quality of its FHA-insured mortgages, costing the government hundreds of millions of dollars after many of those loans defaulted.
Now, Wells Fargo is fighting back.
In a motion filed in a U.S. District Court, attorney Douglas Baruch says the settlement “wiped the slate clean for Wells Fargo in terms of facing any further liability to the United States (except in carefully crafted, narrow circumstances) for a wide range of Wells Fargo conduct relating to the bank’s Federal Housing Administration (FHA) mortgage loan portfolio, among other areas.”
When it comes to underwriting quality control, the government can only bring a case against Wells Fargo on a loan-by-loan basis and only if it can be proven that the underwriter knowingly certified an ineligible loan. Because the latest suit against the bank deals with company-wide conduct and does not include a specific underwriter’s actions, it is considered outside the scope of those criteria, Baruch contends.
A spokesperson for the U.S. Attorney’s Office in Manhattan declined to comment
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Wells Fargo Contends Mortgage Suit Violates Settlement Terms