Wells Fargo set a new record when it agreed to pay the federal government $1.2 billion in settlement fees for the Federal Housing Administration.
The settlement will be used to resolve claims of loan origination violations that took place from 2001 to 2010 within its FHA mortgage insurance lending program. Wells Fargo acknowledged that during period, numerous residential home mortgage loans that it approved as eligible for the FHA insurance program were not. Therefore, the government was forced to step in and pay the costs of FHA insurance claims whenever borrowers defaulted on those loans.
“This Administration remains committed to holding lenders accountable for their lending practices,” Secretary Julián Castro for HUD said in a statement. “The $1.2 billion settlement with Wells Fargo is the largest recovery for loan origination violations in FHA’s history. Yet, this monetary figure can never truly make up for the countless families that lost homes as a result of poor lending practices.”
For Wells Fargo, the settlement allows it to put legal questions surrounding the loans it made to rest, meaning it can finally move on.
“We are dedicated to providing access to credit to a broad range of customers through offerings that exist today as well as new products and programs on the horizon,” Franklin Codel, president of Wells Fargo Home Lending, said in a statement. “Wells Fargo has helped millions of people buy homes and we will continue to meet the financing needs of the customers and communities the FHA program is intended to serve.”