The nation’s largest mortgage lender is attempting to fend off a Justice Department lawsuit that accuses it of recklessly making shoddy mortgage loans, according to a Bloomberg report. Wells Fargo says it paid $5 billion in a national mortgage settlement two years ago, and that should be payment enough.
The Justice Department, however, says the $5 billion penalty was for mortgage servicing abuses, not originations, and Wells must be held to account for making bad government-backed loans, Bloomberg reported.
“All of the loans at issue in that case contain material violations” of mortgage underwriting standards, DOJ attorney Lindsey Powell told the US Court of Appeals’ three-judge panel.
Wells Fargo lawyers, however, called the suit a “brazen attempt” to go back to the well by imposing “massive fraud liability” after already agreeing to the earlier settlement.
Wells Fargo and four other banks agreed in 2012 to a $25 billion mortgage settlement with the Justice Department. The government then pursued additional litigation against four out of the original five banks involved in the settlement. JPMorgan Chase, Citigroup and Bank of America all agreed to settle the additional claims. Only Wells Fargo has chosen to fight the lawsuit.
Wells Fargo and the U.S. government have a minor disagreement. The government thinks Wells should pay a lot of money for making bad loans, and Wells thinks it’s paid quite enough money, thank you very much.