Wells Fargo Loses Appeal To Overturn Settlement With FHA

Posted by Patrick Barnard on June 10, 2014 No Comments
Categories : Required Reading

A federal appeals court judge in Washington has reportedly tossed Wells Fargo's request that the court overturn a 2012 settlement with the Federal Housing Administration (FHA) over faulty mortgages that led to hundreds of millions of dollars in federal insurance payouts.

Wells Fargo was one of five banks subjected to the 2012 national mortgage settlement with the Justice Department and 49 states. The FHA took additional action against four of those banks, including Wells Fargo, over the poorly underwritten loans.

Wells Fargo argued that the terms of the national mortgage settlement precluded the FHA from bringing the additional lawsuit.

The U.S. Court of Appeals, however, ruled that the FHA was, in fact, allowed to bring those suits, as the terms of the national mortgage settlement carved out rights for the government to bring further action against Wells Fargo and the other banks. In effect, the federal appeals court upheld an earlier appeals court ruling that said the FHA was allowed to bring the additional suits.

As a result, Wells Fargo may have no choice but to settle with the FHA.

"We are disappointed with the appellate court's ruling," Ancel Martinez, a Wells Fargo spokesperson, told Bloomberg News. "We look forward to presenting our case in support of our longstanding record of responsible lending."

The other three banks which the FHA brought suits against have since settled those complaints.

For more, check out the Bloomberg News report.

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