Wells Fargo in talks to settle FHA mortgage case

by MPA06 Nov 2014
Wells Fargo announced it is in talks to settle a two-year lawsuit that allegedly cost the Federal Housing Administration (FHA) hundreds of millions of dollars. The nation's largest mortgage lender is accused of certifying more than 6,000 FHA-insured mortgages that did not meet origination and underwriting requirements.

The lawsuit was filed in October 2012, by the Department of Housing and Urban Development (HUD). In addition to certifying ineligible loans, the FHA also accused the big bank of failing to properly review early payment defaults.

In June, an appeals court rejected the lender’s motion to dismiss a lawsuit. Wells Fargo says it paid $5 billion in a national mortgage settlement two years ago, and that should be payment enough.

The U.S. government said the ineligible mortgages caused the FHA to pay out hundreds of millions of dollars in claims on loans that did not qualify for insurance, according to Reuters.

 

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