After the $1.2 billion settlement to resolve claims in relation to misconduct of mortgages, Wells Fargo continues to battle the federal and state mortgage probes. The agreement of settlement was realized early February with Federal Housing Administration.
Wells Fargo, the country's biggest mortgage lender, said that investigations or inspections of certain mortgage related practices are still ongoing. They added that those actions were from federal and state government agencies which includes the United States Department of Justice. The statement was released on Wednesday in its annual 10-K filing.
Looking through the bank's 10-K filing in 2014, the company had referred to "government agencies." The change was evident after seeing the latest filing with the reference of "federal and state government agencies. The bank spokesman declined to give information regarding the change.
Cited from MSN, the company has provided additional legal accrual. This added $200 million to its expense last year. Due to this noninterest expense, the company net income for 2015 was reduced by $134 million to $22.9 billion. That is 3 cents per common share to $4.12 per common share.
For the filing earlier this month, the company had reached an agreement to pay $1.2 billion to give way of a lawsuit brought by the office of Attorney Preet Bharara at Manhattan U.S. in 2012. The said agreement will resolve the claims by U.S. attorney's office in San Fancisco as well as with the U.S. Department Housing and Urban Development.
Aside from Well Fargo, many other lenders such as Bank of America Corp, Deutsche Bank AG and Citigroup have already resolved similar cases pertaining to FHA-insured loans. They also paid hundreds of millions of dollars as of this writing.
According from Reuters, the 2012 lawsuit was about Well Fargo's engagement in "reckless" mortgage and practices of underwriting from the year 2001 to 2005. It was also mentioned that the company missed to report about 6,000 loans from 2002 to 2010. In addition to it, these loans were not able to pass the requirements for insurance under the Federal Housing Administration. Worst is, the company failed to properly inspect early payment defaults.
There was no immediate response from a spokesman for Bharara's office. Loretta Lynch, a spokeswoman for the office of U.S. Attorney General declined to comment.
Although Wells Fargo is considered in a high market-position in mortgages, it has paid less attention in port-crisis mortgage-related government fines compared to other big banks namely Bank of America Corp and JPMorgan Chase & Co.
