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October 10, 2012

U.S. Gov’t Sues Wells Fargo for Reckless Mortgage Loans 
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The Justice Department has filed a lawsuit accusing the banking giant
Wells Fargo of making reckless mortgage loans that ultimately cost the
federal government hundreds of millions of dollars in insurance claims.
Wells Fargo is alleged to have abused the Federal Housing Administration
Program by recklessly handing out loans and forcing the government to
foot the bill when borrowers could not pay. In a statement, U.S.
Attorney Preet Bharara in New York said: "Yet another major bank has
engaged in a longstanding and reckless trifecta of deficient training,
deficient underwriting and deficient disclosure, all while relying on
the convenient backstop of government insurance." The lawsuit comes two
months after Wells Fargo agreed to pay a settlement of at least $175
million for discriminating against African-American and Latino
borrowers.

 

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