Wells Fargo, the nation's largest mortgage lender, denies the allegations, and says it will defend itself vigorously.
Wells Fargo isn't the only big bank accused of such things. This was
more or less America's mortgage-making system for years. The damage it
did likely brought down your home value, too.
The government alleges Wells Fargo took
shortcuts on thousands of mortgages fromMay 2001 through October 2005
and illegally foisted them upon the FHA. It also alleges the bank failed
to report more than 6,000 loans that went bad between 2002 and
2010—which may be one reason why it took so long to file this lawsuit.
America's economic decline is largely
due to armies of negligent people who were paid commissions to push
paper. If you believe what's alleged in countless lawsuits, fraud was
commonplace among sellers, buyers, real-estate agents, appraisers, title
companies and lenders.
It is a lender's responsibility to properly underwrite a loan to be
sure fraud does not occur, let alone run rampant. But when everyone is
cheating, and government begs to take the baggage, a lender thinks more
about the money than hiring and training bright, honest people to
straighten it out.
"Yet another major bank has engaged in a long-standing and reckless
trifecta of deficient training, deficient underwriting and deficient
disclosure, all while relying on the convenient backstop of government
insurance," Mr. Bharara said in a news release.
I predict this case will go the way of so many others: Wells Fargo
will pay a huge settlement, possibly without any admission of guilt,
long before a trial date beeps on any lawyer's smartphone.