U.S. Sues Wells Fargo Over Allegedly Defective FHA Mortgages


On October 9, the United States Attorney for the Southern District of New York filed suit against Wells Fargo Bank, N.A. in the United States District Court for the Southern District of New York. The civil suit seeks damages, including treble damages where available, and civil penalties for alleged violations of the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, breach of fiduciary duty, gross negligence, negligence, unjust enrichment, and payment under mistake in fact. The Government’s complaint alleges that Wells Fargo, a participant in the Federal Housing Administration’s mortgage lending insurance program, failed to report over 6,000 mortgage loans that were in fact ineligible for FHA insurance. As a result of Wells Fargo’s alleged misconduct, the Government allegedly paid hundreds of millions of dollars in connection with insurance claims made on these loans. The alleged defects in connection with Wells Fargo’s origination process – that violations of stated mortgage lending guidelines resulted in poor quality loans – are similar to the allegations that underlie many RMBS investor actions. Complaint.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Orrick - Structured Finance Group | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.