Wells Fargo to Pay $1.2 Billion Over Faulty Mortgages
February 03 2016 - 09:01AM
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 a lender accused of bilking the Federal Housing
Administration, which has historically backed loans to first-time
buyers and those with low incomes.
The government said the mortgages 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.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
(END) Dow Jones Newswires
February 03, 2016 08:46 ET (13:46 GMT)
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