The US government has filed a civil mortgage fraud lawsuit against Wells Fargo, the nation’s fourth largest bank, according to a complaint filed in Manhattan federal court Tuesday.
“As the complaint alleges, yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance,” said US Attorney Preet Bharara in a statement.
The complaint, filed jointly by Bharara and the US Department of Housing and Urban Development, stems from allegations dating back to 2001, where Wells Fargo is accused of wrongfully approving and certifying thousands of defaulted mortgages for Federal Housing Administration insurance.
The government is also accusing Wells Fargo of offering employees bonuses based on the number of loans approved, “as quality repeatedly took a back seat to quantity” the statement outlines.
Wells Fargo denied the claims in a statement, “Many of the issues in the lawsuit had been previously addressed with HUD, said Wells Fargo.”
This suit comes just one week after the New York Attorney General’s office sued JPMorgan Chase, claiming the bank kept investors in the dark about the value of mortgage-backed securities it sold around the same time period of the US financial crisis.
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