Yet another bank, Wells Fargo, is getting sued by the government with allegiations that thousands, yes folks that right, THOUSANDS of loans were concealed from the government as being seriously deficient.
It comes to no surprise Wells Fargo denies the allegations but this is yet again, another bank in the news with a lawsuit alleging poor loan quality during the height of the real estate boom. Did Wells know this was coming? One might ask since they abruptely left the wholesale business not too long ago and earlier this year decided to exit Reverse Mortgages (another government backed program) which they were the #1 lender in the country in that segment.
Nobody really can say but the story can be found here on Huffington Posts website along with other sites as well http://www.huffingtonpost.com/2012/10/09/wells-fargo-lawsuit_n_1952216.html Wells denies the allegations and plans to fight it. I think this will end in yet another settlement for damages the FHA fund inccured for losses on claims to these mortgages. The article puts the number at nearly 6,400 loans were deemed "seriously deficient" and should have not been insured.
Strong language included "lied" to the government were used. Wells Fargo is the nations largest mortgage lender by market share and has maintained this status for quite some time. As the market continues to change and shift I wouldn't be surprised to see more banks under the microscope, with more stories of alleged fraud and concealment because FHA is hurting right now. The Mortgage Insurance Fund is way below Congressional mandated levels and with foreclosures still occuring and unemployment still high, I think we'll see more of this to come in the months ahead.
Stay Tuned on this one. It will be interesting to see how it plays out.
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