- It is the latest settlement related to mortgage fraud in the USA Justice’s Department crackdown against major banks.
- The Department has accused the banks of misleading customers by originating and selling tens of thousands of mortgages they knew were false.
- This, the Justice Department says led to the 2008 financial crisis
Big business scheming and shenanigans has once again caught up with Wells Fargo as it agrees to pay $2.09 billion penalty for misleading customers. Picture: Pixabay
The USA Justice Department has on Wednesday, 01 August 2018 announced that Wells Fargo Bank and several of its affiliates have agreed to pay $2.09 billion civil penalty for ‘alleged origination and sale of residential mortgage loans that it knew contained misstated income information and did not meet the quality that Wells Fargo represented.’
According to the Justice Department, investors including federally insured financial institutions suffered billions of dollars in losses from investing in residential mortgage-backed securities containing loans originated by Wells Fargo.
Acting Associate Attorney General Jesse Panuccio said the settlement holds Wells Fargo accountable for actions that contributed to financial crisis.
It sends a strong message that the Department is committed to protecting the nation’s economy and financial markets against fraud.
The Acting US Attorney for the Northern District of California Alex G. Tse echoed Panuccio and said their office is steadfast in pursuing those engaged in wrongful conduct that seeks to hurt the public.
Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans. Today’s agreement holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted.
Wells Fargo has recently been trying to rid itself of bad reputation concerning product sales. The bank has April 2018, in a case not related to the USA Justice Department announcement, paid $1 billion to settle abuses in sales of products related to auto and mortgage loans.
The case announced Wednesday, 01 August 2018 dates back more than a decade ago, between 2005 and 2007.
The bank has through its CEO Tim Sloan said as the bank they are happy to break with their past.
We are pleased to put behind us these legacy issues regarding claims related to residential mortgage-backed securities activities that occured more than a decade ago.