The U.S. Attorney for the Southern District of New York, Preet Bharara, has filed suit against Wells Fargo — alleging that the bank failed to properly underwrite at least 100,000 loans it stamped for approval for Federal Housing Administration insurance over 10 years. His office is seeking “hundreds of millions of dollars” in damages, according to a Los Angeles Times report.
“As the complaint alleges, 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,” Bharara said.
He noted that the Wells Fargo employee bonus system rewarded workers based on the number of loans they approved.
Bharara alleges that the bank failed to notify the Department of Housing and Urban Development when it became aware of the problems with the loans. [LA Times] – Katherine Clarke