SAN FRANCISCO–Wells Fargo has agreed to pay a $1.2-billion fine in a Department of Justice lawsuit over deception related to thousands of risky mortgages.
The settlement with Wells Fargo, the largest U.S. mortgage lender and third-largest U.S. bank by assets, was filed on Friday in Manhattan federal court, according to Reuters. The settlement also resolved claims against Kurt Lofrano, a former Wells Fargo vice president.
Wells Fargo "admits, acknowledges, and accepts responsibility" for having from 2001 to 2008 falsely certified that many of its home loans qualified for Federal Housing Administration insurance, the Justice Department said in announcing the settlement.
In addition, Wells Fargo admitted to having from 2002 to 2010 failed to file timely reports on several thousand loans that had material defects or were badly underwritten, a process that Lofrano was responsible for supervising.
The Justice Department said the shortfalls led to substantial losses for taxpayers when the FHA was forced to pay insurance claims as defective loans went south.
U.S. Attorney Preet Bharara called the fine paid the result of “years of reckless underwriting” at Wells Fargo.