Wells Fargo Finally Settles Lawsuit Over Veterans Affairs Loans

Posted by Lauren Tyler on August 04, 2017 No Comments

Wells Fargo & Co. announced today that the company has agreed to settle a lawsuit that claimed some Veterans Administration (VA) Interest Rate Reduction Refinance Loans (IRRRLs) originated by Wells Fargo should not have been eligible for VA guarantees.

The suit, which was filed in 2006 and unsealed in 2011, sought compensation from the U.S. government over guarantee claims paid by the VA after those loans defaulted.

Under the agreement, Wells Fargo denies the allegations in the lawsuit but will pay $108 million to the U.S. government to resolve the claims.

Wells Fargo has previously disclosed this legal action in its public filings, including in its most recent Quarterly Report on Form 10-Q, and the settlement costs have been previously accrued. The lawsuit had claimed that some VA IRRRLs should have been ineligible for VA guarantees because of certain fees charged to the borrowers when the loans were originated.

In 2011, Wells Fargo settled a separate class-action lawsuit by allowing all veterans who received a VA IRRRL from Wells Fargo between Jan. 20, 2004, and Oct. 7, 2010, to obtain compensation regardless of whether there were indications that the fees in question had been paid by the customer.

“More than six years ago, when questions about fees on Veterans Administration refinance loans were raised, we resolved those concerns by improving our internal controls and made compensation available to VA customers who closed a refinance before that time,” says Tim Sloan, Wells Fargo’s CEO. “Settling this longstanding lawsuit allows us to put the matter behind us and continue to focus on serving customers and rebuilding trust with our stakeholders. We are committed to serving the financial health and well-being of veterans, and we will continue to honor that commitment now and in the future.”

Wells Fargo has funded nearly 23% of all VA loans guaranteed since 2001.

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