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U.S. Sues Wells Fargo for Alleged Mortgage Fraud

Oct. 9, 2012 4:43pm Becket Adams

NEW YORK (TheBlaze/AP) — The federal government has sued Wells Fargo Bank in New York, blaming the nation’s largest originator of home mortgages for thousands of loan defaults over the last decade.

A civil mortgage fraud lawsuit filed in U.S. District Court in Manhattan on Tuesday seeks to recover hundreds of millions of dollars that the Federal Housing Administration, which insured the loans, had to pay out after borrowers defaulted.

The lawsuit charges San Francisco-based Wells Fargo with falsely certifying that its loans met the standards necessary to be eligible for government insurance. U.S. Attorney Preet Bharara says the bank’s plan to reward employees for the number of loans they approved “was an accelerant to a fire already burning.”

This marks the fifth lawsuit that the government has brought against major lenders over mortgage practices.

Wells Fargo & Co. has denied the allegations and is promising a vigorous defense.

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Comments (61)

stumpy68
Posted on October 10, 2012 at 10:58pm
My ex brother in-law worked for Wells fargo
before the crap hit the fan and he was fired.
Thats it there is no moral i just like that story

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thacker.e
Posted on October 10, 2012 at 9:29pm
Wells sold my home after 3 months. I was a tour bus operator and told them I could catch up by end of March.

They sold 1st of March without advertisement.I lost $100.000. Earl

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thacker.e
Posted on October 10, 2012 at 9:25pm
Wells Fargo sold my home without advertisement after 3 missed payments and on the phone I told then I could catch up after some bad luck by end of March. They sold 1st of March. I will testify against them. Earl

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ColoradoMaverick
Posted on October 9, 2012 at 10:37pm
I’ve been banking with Wells Fargo for many, many years and have my mortgage with them. They have always treated me well. Of coarse, I do pay my mortgage on time and have a credit score of 816. It’s what happens when you are responsible and live within your means Obama.

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- Servant Of YHVH
  Posted on October 10, 2012 at 4:02am
  @coloradomaverick
  That is because every single person in this country knows that the government created this mess, forced the banks into this mess and now are trying to cover up their fraud by accusing the banks of it. All they are doing is reminding me of a little child that breaks something and then tries to hide it under a couch cushion, making the cushion lay at a 45 degree angle because the broken item is way too big to hide under the cushion. At least the little child has the excuse of being a little child too young to figure out that you can’t hide something that way. The fraudulent government has NO excuse of being to young to know that, maybe they could claim ultimate stupidity. Now that might be believable from them!
  
  Report this comment
- G-WHIZ
  Posted on October 10, 2012 at 10:24am
  Looks-like W.F. didn’t give enough graft to BHO’s2012 campaign!!!
  
  Report this comment
steveh931
Posted on October 9, 2012 at 10:07pm
I hope Wells Fargo fights this and exposes every person that pushed for home loans through the Community Reinvestment Act Regulations including the Federal Reserve. Many still hold seats in the House and Senate.

http://www.youtube.com/watch?v=iW5qKYfqALE

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LoneRanger26
Posted on October 9, 2012 at 9:13pm
Wells Fargo, “the next stage”.

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UnreconstructedLibertarian
Posted on October 9, 2012 at 9:01pm
Most people don’t know who their note is actually secured by. While you may think you have no attachment to Fannie or Freddie – you have no control over who your originator sold their interest to.

The mortgage backed debacle is so tangled, most banks nor gov entities can prove actual ownership of the notes. What nobody wants the average joe to find out is, actual title to the mortgages sold into the “securities” cannot be proven by any single entity – its tied up in the abyss of “Mortgage backed Securities”.
Read this link in its entirety:
http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2010/10/15/the-subprime-debacle-act-2.aspx

That was the mess in late 2010, it does NOT make me feel good that the FED is buying up these bogus “securities” in late 2012, as the final holder of the whole shebang may be able to excercise the rightful claim upon the whole of “bundled” mortgages per securitized instrument. Get the picture? This QE-infinity move was never to free up the housing market, it was to consolidate ownership of the titles of lienhold.

Housing could be currently in process of “collectivisation” right in front of our noses?

Yep.

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- drs1969
  Posted on October 10, 2012 at 12:44am
  Wf bought my mortgage from First Union, several years back. Then, when BHO went into office, I paid off all my debts. They never sent my cancelled mortgage, but it was cancelled at the court house. Then I start reading all the stories about people challenging their mortgages, and think I should have, too. They never had possession of mine!
  
  Report this comment
- h-schoolmom
  Posted on October 10, 2012 at 8:48am
  This is exactly why one should secure a “traditional” mortgage with a local small bank putting the required 20% down on a conventional mortgage. There is no “federal” agency involved; no Fannie or Freddie or FHA, or any of the other myriad federally guaranteed loans. Guess what folks? When your note is “owed” to the federal government as a result of the federal backing of our mortgage, when we have an out-of-control government who comes after payment in full, and you can’t pay, they will take your home at the end of the barrel of a gun. Yes, using a small bank with no government connection costs a couple % more on your note, but at least the government doesn’t own you. Call me a conspiracy theorist, but I truly believe all these government-guaranteed mortgage programs are all tied into Agenda 21, with the ultimate goal being no private property ownership. It was a genius and underhanded way of ultimately being able to physically take people’s homes from them. Let’s face it–who can come up with all the $$$ to pay off a mortgage when the government decides to call in the note?
  
  Report this comment
- UnreconstructedLibertarian
  Posted on October 10, 2012 at 10:44am
  Schoolmom,
  
  Dead on – correct.
  
  I’m no conspiracy theorist either, but long before discovering Agenda 21 – I suspected the Government was out to destroy every right of the citizenry to be independent. Moreso, any ability of the citizenry to defy the Government lawfully. Agenda 21 is just another example of how our Government, and other governments on a global scale, will agree to anything that accomplishes the ultimate agenda – which is unquestionable control.
  
  I have experianced firsthand the overreach of not only government, but also governmentally sanctioned (unethical) corporate activity, so many times and in so many sectors – this has become “old hat”.
  
  You are also doubly-correct on the patronage of small, community banks. From personal experiance, sound banking is sound banking and has rubbed off on me regarding the choices I have made for myself. However, there is a silent war being waged against these small banks. These banks do not have the interest advantage FED participating banks do (unfair competition), the FED is crushing interest rates so CD’s have negative values to the depositor (driving down mid-long term deposits in these small banks), and endless harrassment via FDIC pressuring them into consolidation.
  
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dfissell
Posted on October 9, 2012 at 8:38pm
Gov: Hay bank give them loan Bank :no there a risk Gov: Dont care Give them loan or we sue you in to the ground Bank: ok we will give them a loan a bit of time passes Gov: bank we are going to sue you for giving loan to know risk Bank: told you we are damed any way you look at it

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- Walkabout
  Posted on October 9, 2012 at 8:56pm
  Preety much. If they don’t loan then they are racist. If they do loan, they get sued anyway.
  
  Department of Injustice headed by Eric Holder.
  
  There was a clip on him on TV where he was saying Congress should not exercise their oversight of the Libyan Ambassador’s death because the Injustice department was looking into it.
  
  The Injustice investigation will last long enough for the Democrats to sweep everything under the rug & maintain & increase their power.
  
  Suing Wells Fargo is par for the course.
  
  Report this comment
F_This
Posted on October 9, 2012 at 7:53pm
Well the US needs to sue themselves for Fanny Mae and Freddie Mac. Talk about mortgage fraud.

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- kenboo1
  Posted on October 9, 2012 at 8:34pm
  True dat… it was Fannie and Freddie underwriting standards that created the debacle in the first place….
  
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- G-WHIZ
  Posted on October 10, 2012 at 10:33am
  WEPEOPLE need to sue BWANNYfWANK AND KISS-ASS-DOD for their full NETWORTH!!
  WETHEPEOPLE need to sue NANNYPEEPEELOUSY AND HAIRYNOREID for their full NETWORTH! Rid the U.S.A of all PROGRESSIVE/COMMIE/MUDDIBRUDDERHOODIE!!!
  
  Report this comment
Jenasus
Posted on October 9, 2012 at 7:20pm
The FED is buying more mortgages with the money the FED is printing and will use the same scam of derivitives to screw America again.
Wake Up America.

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- tcseacliff
  Posted on October 9, 2012 at 7:40pm
  yeah, any day know, “Let”s blame Bush! I think Barney Frank, and Harry Reid should be named in this law suit also! it is about time we put a stop to all this!
  
  Report this comment
- bigfatslob
  Posted on October 9, 2012 at 8:02pm
  Fellow Blazers, I so look forward to the next 16 years of Romney + Ryan to blame OBAMA !
  
  Report this comment
- Walkabout
  Posted on October 9, 2012 at 9:02pm
  Barney Frank? the guy who camemout of the closet with a belt around his neck? That wierdo?
  
  The wierdo who wrote & passed legislation that is still messing up the country?
  
  Report this comment
- drs1969
  Posted on October 10, 2012 at 12:54am
  Every time your gas and food prices go up, you can thank Bernanke. He is bailing out the banks first, and empowering deadbeat squatters, also. Otherwise, the banks would collapse and their new owners would foreclose. It’s theft!
  
  Report this comment
mrsuperpat
Posted on October 9, 2012 at 7:04pm
It’s All ALL OF THEM!! Gov, Big Banks, Corps, Media, and foundations are all colluding to screw the American Tax Payer. The fascist takeover of America on our watch.

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shogun459
Posted on October 9, 2012 at 7:02pm
Wells Fargo refused the TARP takeover attempt so the Government is going to destroy them with endless lawsuits and regulations.

Look at the list of Banks that DIDN’T Take the Money and you will find the list of Banks the Government will or are Sueing.

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- UnreconstructedLibertarian
  Posted on October 9, 2012 at 8:13pm
  Wells Fargo did in fact take TARP money.
  
  They were given TARP money that they used to take over Wachovia instead of shoring up their own bad paper – which was the purpose of the money (or so we were told?).
  
  Check it out, WF was party to perhaps the most dirty of TARP tricks during the meltdown of ’08.
  
  Report this comment
- Walkabout
  Posted on October 9, 2012 at 9:09pm
  UnreconstructedLibertarian
  
  The majority of the banks & investment firms did not want the TARP money. Bush’s Treasury Secretary Paulson threaten them into taking it. Wells Fargo was one of the comapnies that did not want TARP.
  
  But since you are forced to take it then you might as well use it for what comapnies do, GROW.
  
  And it couldn’t be a combnniation of factors that led to bad laons such as people lying about income, bad employees & such. No it is always centrally directed.
  
  Wells Fargo was just sued by the governement 2 months ago or so for not making enougn loans to minorities based a n a Department of Injustice statistical analysis.
  
  Report this comment
- UnreconstructedLibertarian
  Posted on October 9, 2012 at 10:24pm
  Wells Fargo did not “have” to take the TARP money. If they were going to put up a “vigorous” fight, that would have been the time (kinda like Ford Motor Co?). The Treasury, via FDIC, dangled the bait in front of them (Wachovia) and WFC bit – if WFC didn’t see the hook, I don’t feel sorry for them. It looks like the Gov is reeling in its prize catch. Reckon Goldman Sachs is licking its chops?
  
  Wells Fargo took the money for the sole purpose of buying Wachovia, the whole deal was brokered by the Treasury, aka Paulson, aka Goldman Sachs. TARP was never to be used for such, and would still be considered outside sold purpose of TARP – but nobody is considering. Isn’t it ironic WFC only started failing the “means” test after it took over Wachovia? The leadership at WFC must be comatose imbeciles.
  
  Wells Fargo made the Faustian bargain, now the Devil is coming to collect. How does that “growth” look to ya know WFC? Looks like an incurable cancer to me.
  
  Report this comment
Individualism
Posted on October 9, 2012 at 6:58pm
they better hope Romney wins otherwise they might get punished o dear. notice also how Wells Fargo donated to Obama’s campaign last time and not this time, maybe there getting microsofted or there really those bad dirty bankers hurting the country. Maybe Romney will let them do what they want as long as they donate to him just like Obama.

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deloclem
Posted on October 9, 2012 at 6:57pm
I have friends who refinanced their house a year ago through Wells Fargo. Wells Fargo refinanced the mortgage and supposedly paid back property taxes from the mortgage refinance, or so they thought. A few weeks ago they had a letter from the tax collector delivered by the sheriffs department that their house was being auctioned for back taxes. My friends checked the houses in the auction for back taxes on the internet and every single one had mortgages with Well Fargo. I have no doubt that Wells Fargo has made some shady loans.

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- shogun459
  Posted on October 9, 2012 at 7:10pm
  So you trust the Obamas Tax Nazis to play by the rules.
  
  Isn’t it just as likely that the money was paid and the IRS has been instructed to lie about it by the same White House that is using the IRS to Audit and hound political opponents?
  
  They have control of every Bank that took the bailout money and TARP. Wells Fargo was only Forced to take TARP because it was written as a law they couldn’t refuse. THIS is how the Government intends to take control of the banks that it doesn’t control already.
  
  Don’t believe me? Then why when GM tried to pay back the Government loan, in exchange for the controling stock the Government holds, did the Government refuse and insist on maintaining controling interest in GM?
  
  Answer: Because THESE Socialists are also Nationalists, which makes them National Socialists.
  {8 ) Have a nice Day!
  
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mtsnj
Posted on October 9, 2012 at 6:49pm
and How about Bank of America, ne Countrywide the biggest offender???

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soybomb315_II
Posted on October 9, 2012 at 6:04pm
wells fargo must have not greased enough palms

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- damon_k
  Posted on October 9, 2012 at 6:15pm
  This article points out exactly why the housing industry is stuck in limbo. Banks are afraid to make a move for fear that the Feds will sue them or worse. Read more insights at: http://smallcraftadvisorychronicles.blogspot.com/
  
  Report this comment
- RJJinGadsden
  Posted on October 9, 2012 at 6:23pm
  SOYBOMB315_II, That’s just what I was thinking. After all, it was Clinton with the swipe of his pen on an Executive Order that started all of this sub prime crap in the first place. The lenders were required to make poor quality loans.
  
  Report this comment
- The-Monk
  Posted on October 9, 2012 at 6:24pm
  Hi Soybom315,
  
  You took the words right out of my mouth…..
  
  Report this comment
- Eastinfection
  Posted on October 9, 2012 at 6:41pm
  evenin’ gents..
  
  This is what happens when the feds say, “sure, we have rules… but we don’t have rules-rules -wink wink- and BTW.. we’ll back up your fraudulent activities with government securities that we fund by borrowing money from China which bases it’s currency on the open global market, which is all backed by the U.S. dollar!” …..are we having FUN yet????
  
  Report this comment
- mtsnj
  Posted on October 9, 2012 at 6:51pm
  right just like Lehmann Bros.. they pissed enough off that they were the scape goats.
  
  Report this comment
- Eastinfection
  Posted on October 9, 2012 at 7:16pm
  Oh and MONK..
  
  finished reading the links you sent… responses back on the Tom Cruise Cult page ;)
  
  Report this comment
republic2011
Posted on October 9, 2012 at 5:43pm
Retribution for not wanting to take a bail out.

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Dodsfall
Posted on October 9, 2012 at 5:38pm
Uh oh. They must have forgot to send their campaign contribution in on time.

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- RJJinGadsden
  Posted on October 9, 2012 at 6:26pm
  Yeah, back in the ’90s Bill Gates would not allow Microsoft to make any political contributions to either party during the ’96 election campaigns. Clinton aimed Janet Reno at them and let loose the dogs of war.
  
  Report this comment
justangry
Posted on October 9, 2012 at 5:33pm
I’d rather see them send these crooks to jail.

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- Walkabout
  Posted on October 9, 2012 at 8:58pm
  Fist Jesse Jackson threratens them. They make more laons. Then the government sues them. Then you want to throw them in jail. You are definitely painted.
  
  Report this comment
- Walkabout
  Posted on October 9, 2012 at 9:03pm
  correction of typos: Threatens & loans.
  
  Report this comment
righthanddrive
Posted on October 9, 2012 at 5:24pm
So when are the US and state AG going to go after Barney, Dodd, Schumer and the Congressmen/Senators of MD, VA, IL, NY, MA for forcing community banks to buy Fanny/Freddy preferred shares to support the ‘no income verification’ program under the Community Reinvestment Act. NY Gov. Cuomo who was head guy at HUD should also be charged. These charges and the ones against JPM et al is such an affront to our intelligence it is pathetic. But then we have a sorry president at the moment who thinks this will get him votes.

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- randy
  Posted on October 9, 2012 at 5:40pm
  Exactly!!!!!!!!!
  
  Report this comment
cvs334
Posted on October 9, 2012 at 4:57pm
What about BofA? They took over CountryWide who were the biggest crooks!

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- loriann12
  Posted on October 9, 2012 at 5:22pm
  OMG! When I was house hunting in late 2008 Nationwide said I could qualify for a loan as high as I wanted. I crunched numbers and told them what I could afford. Had I been ignorant of what I know I could afford, I’d be in deep water now. We originally had a loan for $99,000 with 5% interest. We refinanced a year later with a hybrid loan (fixed for 3 years, then can only raise or lower 1 point) for 3%. They rolled all the closing costs into the loan. We now owe $106,000 and I just got my tax statement that it’s worth about $76,200.
  
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- drs1969
  Posted on October 10, 2012 at 1:05am
  They paid some fines. Plus, Buffet bought their stock last year when they were just ready to collapse and take the whole market down with them. The fix is now in. The stock market has been rigged ever since.
  
  Report this comment
yougottabekidding
Posted on October 9, 2012 at 4:52pm
do I have this right?

You have to loan to people that can not afford it, and we fine you if you do.

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- 13th Imam
  Posted on October 9, 2012 at 5:10pm
  You can thank that Freak Barney Fwank and my ex-senator Chris “Waitress Sangrich” Dodd.
  
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- AvengerK
  Posted on October 9, 2012 at 5:12pm
  Bingo! It’s about FHA loans..read: “Affordable Housing”. It’s another negative consequence of the liberals push for lower lending standards.
  
  Report this comment
Carpy1
Posted on October 9, 2012 at 4:51pm
EEEEK! Wells Fargo is my mortgage holder. Time to refinance?

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- AvengerK
  Posted on October 9, 2012 at 5:00pm
  Don’t panic this doesn’t reflect on every loan. Wait for the facts to be given. WF is in very good shape.
  
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- AvengerK
  Posted on October 9, 2012 at 5:12pm
  Its to do with FHA loans..read: “Affordable Housing”. It’s another consequence of the push by liberals to lower lending standards. This doesnt’ affect your loan nor will WF be in financial trouble for it.
  
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- Walkabout
  Posted on October 9, 2012 at 9:00pm
  I agree with AVENGERK. This drama has een playing out for a quarer of a century. This is hopefully the last act.
  
  Report this comment
- bgotts27
  Posted on October 10, 2012 at 10:18am
  They aren’t after Wells Fargo for the loans that are being paid. The government is only suing them for the loans that they made to deadbeats under federal orders. Those loans then required FHA insurance. Now that the deadbeats did what deadbeats do (or don’t do, in this case, by not paying their bills), and the insurance had to cover the costs, the government wants their money back so they can make their interest payment to China.
  
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dovesong
Posted on October 9, 2012 at 4:50pm
They can add several other banks to that list too. I saw many mortgages first hand so I know Wells Fargo wasn’t the only one.

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- loriann12
  Posted on October 9, 2012 at 5:24pm
  My lender was GMAC and they just declared bankruptcy and sold my loan to someone else. Isn’t GMAC a subsiderary of GM?
  
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ZAP
Posted on October 9, 2012 at 4:46pm
LQQKS like no bonuses this year….

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- cubber
  Posted on October 9, 2012 at 5:06pm
  The AG is not getting a bonus? Say it isn’t so.
  
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