Wells Fargo & Co. said Wednesday it agreed to pay $1.2 billion to resolve certain civil claims government regulators had pending against the company. The government wanted to recover money that the FHA paid after borrowers defaulted on Wells Fargo mortgage loans.
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The settlement resolves a lawsuit filed in federal court in Manhattan in 2012 accusing Wells Fargo, the country’s largest mortgage lender, of engaging in misconduct in originating and underwriting government-insured mortgages.
To view the full article, register now. That reduces its profit for previous year by $134 million, or three cents a share.
Schiller said delinquency and foreclosure rates for mortgage loans have declined to the lowest level in four years, prompting Wells Fargo to lay off employees.
Wells Fargo reported the settlement Wednesday morning in a filing with the Securities and Exchange Commission, noting that the deal has not been finalized.
There are job openings available at Wells Fargo in the Portland market, Underhill added, and the laid off employees are encouraged to apply.
Prosecutors alleged the bank “engaged in a regular practice of reckless origination and underwriting” of FHA loans, which are backed by federal insurance and aim to help first-time home buyers. The amount of the additional reserve wasn’t immediately disclosed by the bank.
The company’s 2015 profit is now $22.9 billion, or $4.12 a share.
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Other banks, including Charlotte-based Bank of America, have been trimming mortgage staffs they bulked up during the financial crisis to handle problem loans. Partly as a result, some major banks have pulled back from the FHA program by imposing their own more stringent requirements on FHA loans.
