As per the settlement, Wells Fargo admits, acknowledges, and accepts responsibility for having from 2001 to 2008 falsely certified that several of its home loans qualified for Federal Housing Administration insurance.
The bank also admitted that it did not disclose thousands of faulty mortgage loans to the Department of Housing and Urban Development (HUD).
Between 2002 and October 2005, the bank identified through its internal quality assurance reviews about 3,000 FHA loans with material findings.
Wells Fargo did not report the loans to HUD and it engaged in virtually no self-reporting during the four-year period and only minimal self-reporting after 2005.
The bank also failed to self-report to HUD the bad loans that it was originating from 2002 to 2010.
The Justice Department’s Civil Division head and Principal Deputy Assistant Attorney General Benjamin Mizer said: "In addition to today’s resolution with Wells Fargo, the department has pursued similar misconduct by numerous other lenders, returning more than $4 billion to the FHA fund and the Treasury and filing suit where appropriate."
US Attorney Preet Bharara for the Southern District of New York said: "With today’s settlement, Wells Fargo has finally resolved the years-long litigation, adding to the list of large financial institutions against which this office has successfully pursued civil fraud prosecutions."
The settlement with Wells Fargo is claimed to be the largest recovery for loan origination violations in FHA’s history.
Image: A Wells Fargo bank on College Avenue in Berkeley. Photo: courtesy of Coolcaesar at English Wikipedia.
