Wells Fargo Agrees to Pay Over $2 Billion To Settle Claims Against the Bank Regarding Residential Mortgage-Backed Securities

Posted on August 3rd, 2018 at 12:00 PM
Wells Fargo Agrees to Pay Over $2 Billion To Settle Claims Against the Bank Regarding Residential Mortgage-Backed Securities

From the Desk of Jim Eccleston at Eccleston Law LLC:

The U.S. Department of Justice (DOJ) has announced that Wells Fargo Bank has agreed to pay $2.09 billion to end allegations of misrepresentations to investors between 2005 and 2007 after the bank had ramped up its subprime lending ahead of the financial crisis.

More specifically, in its complaint, the DOJ asserted that even though Wells Fargo knew that a significant percentage of borrowers had inflated their income on their applications, the bank failed to disclose that information to investors who bought residential mortgage-backed securities. Wells Fargo became aware that a significant percentage of borrowers had inflated their income on their applications by comparing a borrower’s stated income to their tax records. Moreover, according to the DOJ, the majority of loan applications had a gap between their stated income and tax records, and Wells Fargo employees, including top executives, saw the reports.  

Furthermore, when the market crashed in 2008, Wells Fargo had at least 73,529 loans backing securities during the three years at issue, and close to half of them eventually defaulted, causing billions in losses.

Without admitting or denying the allegations, Wells Fargo agreed to pay the civil penalty to avoid litigating claims brought under the Financial Institutions Reform Recovery, and Enforcement Act.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: james eccleston, eccleston law, eccleston law llc, eccleston, wells fargo, mortgage

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