Wells Fargo Fights FHA Claims

by San Antonio Attorney

Two years after other big banks paid nearly $2 billion to settle fraud charges by the Federal Housing Administration (FHA), Wells Fargo & Co. is determined not to give up so quickly.

Wells Fargo, along with other four of the biggest banks in the United States, agreed in a $25 billion deal with the Justice Department to settle illegitimate mortgage practices that included mishandled foreclosures. The FHA also sued them. JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. chose to settle the claims. But Wells Fargo decided to fight arguing that the nationwide settlement should have stopped the additional FHA claims.

The bank told a federal appeals court in Washington that the claims of the FHA is a shameless action to inflict enormous fraud liability only a few months after Wells Fargo paid $5 billion to satisfy the agreement with the Justice Department.

In the FHA case filed in the federal court in Manhattan, the agency claimed that it paid hundreds of millions of dollars on very delinquent home loans because Wells Fargo did not carefully examine the origination of every loan. The FHA guarantees mortgages to help low income people purchase homes.

Wells Fargo sought help from the federal judge who handles the nationwide accord, asking her to prevent the FHA from taking legal action against it. Washington U.S. District Judge Rosemary Collyer denied the bank’s request. She said that Wells Fargo does not have immunity from the allegations filed by the FHA in New York.

Wells Fargo obtained immunity from legal actions over claims of false reports it created that it was adhering to all the rules of FHA and Department of Housing and Urban Development. The protection did not include alleged violations of FHA or HUD rules.

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