DOJ to Pursue Damages in Unfair Lending from Wells Fargo
Tuesday, May 8, 2012 — The Department of Justice told Wells Fargo ($33.01 -0.4915%) it might pursue monetary damages and civil penalties against the bank under fair housing laws, alleging lending malfeasance in previously originated mortgages.
In a Securities and Exchange Commission filing on Tuesday, Wells Fargo said the investigations relate to whether it violated fair laws and regulations relating to mortgage origination practices and whether it properly disclosed facts and risks in offering documents for its residential mortgage-backed securities.
“We believe such claims should not be brought and continue seeking to demonstrate to the Department of Justice our compliance with fair lending laws,” the bank said.
The San Francisco-based bank was hit in April with allegations that it discriminated in its maintenance of previously foreclosed properties in minority neighborhoods, according to a formal complaint filed with the Department of Housing and Urban Development.
The National Fair Housing Alliance, a consortium of more than 220 nonprofits, alleged in April that Wells Fargo discriminated in its in its maintenance of previously foreclosed property in minority neighborhoods. The organization spent the past year investigating the largest mortgage servicers and the upkeep of REO. Evidence showed homes in predominately white neighborhoods received far more regular maintenance and efforts to sell than vacant homes in minority communities, according to a report.
And in March, the Securities and Exchange Commission filed a subpoena enforcement action in a California federal court against the bank for alleged failure to produce documents in a SEC mortgage-backed securities probe.
The commission is investigating possible fraud in connection with Wells Fargo’s sale of nearly $60 billion in residential mortgage-backed securities to investors, according to court documents. The SEC said it filed subpoenas with Wells Fargo that date back to September 2011.
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