Wells Fargo Bank will pay a $1.2 billion penalty to settle a claim that the bank illegally claimed certain loans were eligible for a federal insurance program, the Justice Department said Friday.
The Justice Department argued that Wells Fargo had lent recklessly and relied on the federal government to pick up the tab when lessees defaulted.
“The $1.2 billion settlement with Wells Fargo is the largest recovery for loan origination violations,” said Housing and Urban Development Secretary Julián Castro. “This monetary figure can never truly make up for the countless families that lost homes as a result of poor lending practices.”
“Today’s court filing details a previously announced agreement in principle that resolves not only the pending lawsuit filed by the U.S. Attorney for the Southern District of New York, but also a number of other potential claims going back as far as 15 years in some cases,” said Franklin Codel, president of Wells Fargo Home Lending. “It allows us to put the legal process behind us, and to focus our resources and energy on what we do best—serving the needs of the nation’s homeowners.”