Shannon Stapleton / REUTERS
The federal government is suing Wells Fargo to recover hundreds of millions of dollars in FHA-insured loan defaults.
By NBC News wire services
NEW YORK???The U.S. government has sued Wells Fargo Bank in New York, blaming the nation's largest originator of home mortgages for thousands of loan defaults over the last decade.?
A civil mortgage fraud lawsuit filed in U.S. District Court in Manhattan on Tuesday seeks to recover hundreds of millions of dollars that the Federal Housing Administration, which insured the loans, had to pay out after borrowers defaulted.
The lawsuit charges San Francisco-based Wells Fargo with falsely certifying that its loans met the standards necessary to be eligible for government insurance. U.S. Attorney Preet Bharara says the bank's plan to reward employees for the number of loans they approved "was an accelerant to a fire already burning."
Bharara's office has brought similar cases in the past year, including one against Citigroup Inc unit CitiMortgage Inc, which settled the case for $158.3 million in February, and against Deutsche Bank, which paid $202.3 million in May to resolve its case.
The U.S. Attorney's office in Brooklyn brought the biggest such case, against Bank of America Corp's Countrywide unit, which agreed in February to pay $1 billion to resolve the allegations.?
Wells Fargo & Co. has denied the allegations and is promising a vigorous defense.?
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