Wells warns of higher foreclosure suit costs
CHARLOTTE, North Carolina
CHARLOTTE, North Carolina (Reuters) - Wells Fargo & Co (WFC.N) on Friday raised its worst-case estimate for litigation losses by 42 percent to $1.7 billion because of its exposure to foreclosure-related legal issues.
The San Francisco-based bank's latest loss projection, disclosed in its first-quarter financial report filed with the Securities and Exchange Commission, increased by $500 million from $1.2 billion in the previous quarter.
A company spokeswoman said the increase was due to foreclosure-related matters. She declined to elaborate.
Wells Fargo said in the filing it does not expect these losses to hurt the bank's financial position. But it acknowledged that unexpected developments "if unfavorable, may be material to Wells Fargo's results."
The disclosure is the latest by a large U.S. mortgage lender that the costs associated with foreclosure litigation are rising.
Wells Fargo, the country's largest home lender, and other major U.S. banks came under fire last fall amid growing evidence that lenders cut corners with documents and processes involved in repossessing homes.
The scandal spurred on-going investigations by nearly a dozen state and federal agencies, including a coalition of 50 state attorneys general.
Last month, the country's 14 largest mortgage servicers, including Wells Fargo, announced a settlement agreement with the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and other agencies.
Under the settlement, banks must overhaul their foreclosure procedures and hire consultants to review foreclosures from 2009 and 2010.
Meanwhile Wells Fargo Bank N.A. on March 31, entered into a consent order with the OCC, which oversees national banks, to fix and better manage foreclosure practices. Wells neither admitted nor denied the findings.
(Reporting by Joe Rauch, editing by Gerald E. McCormick, Dave Zimmerman)