Wells Fargo to Pay $1.2 Billion Over Faulty Mortgages -- Update
February 03 2016 - 9:17AM
Dow Jones News
By Chelsey Dulaney
Wells Fargo & Co. said Wednesday that it has agreed to pay
$1.2 billion to settle a long-running suit that accused the company
of "reckless" lending and leaving a federal insurance program to
pick up the tab.
The agreement settles civil charges with the U.S. Justice
Department, two U.S. attorneys and the Department of Housing and
Urban Development
The government sued Wells Fargo in 2012, accusing the U.S.
mortgage lender of engaging in "regular practice of reckless
origination and underwriting" of government-backed loans. The
action was one of several brought under the Federal False Claims
Act against lenders accused of bilking the Federal Housing
Administration, which has historically backed loans to first-time
buyers and those with low incomes.
According to the original complaint, Wells Fargo said that more
than 100,000 FHA loans met federal guidelines when more than half
of them didn't.
Wells Fargo had previously indicated it would fight the case and
denied the allegations when the government brought its case in
2012.
The government said the loans in question were made under the
Federal Housing Administration lending program from 2001 to
2010.
As a result of the settlement, Wells Fargo said it has added to
its legal accrual for 2015, which it reported results for on Jan.
15. That has reduced its profit for last year by $134 million, or 3
cents a share.
The company's 2015 profit is now $22.9 billion, or $4.12 a
share.
Wells Fargo noted that the settlement isn't yet finalized.
Shares edged up 0.7% premarket.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
February 03, 2016 09:02 ET (14:02 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Apr 2024 to May 2024
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From May 2023 to May 2024