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Wells Fargo may face fair lending claims
A Seattle police officer guards the Wells Fargo building during May Day demonstrations that went violent in downtown Seattle May 1, 2012.
Credit: Reuters/Anthony Bolante
(Reuters) - Wells Fargo & Co (WFC.N) could face civil charges from the U.S. Department of Justice under laws that prohibit discrimination against minority homebuyers, the bank disclosed on Tuesday.
The fourth-largest U.S. bank said in a securities filing it believes the charges should not be brought and said it is seeking to show the department that it is in compliance with fair lending laws.
A bank spokeswoman declined to comment beyond the filing.
The disclosure comes several months after Bank of America Corp's (BAC.N) Countrywide Financial unit agreed in December to pay a record $335 million to settle similar charges.
The Justice Department accused Countrywide of charging blacks and Hispanics higher interest rates and fees than whites, and steering minorities to more expensive subprime loans even though they were qualified for traditional mortgage rates. Countrywide denied the department's allegations.
A DOJ spokeswoman did not immediately respond to a request for comment.
Separately, Wells Fargo received an $85 million penalty last year from the Federal Reserve Board over charges that it steered borrowers into high-cost loans.
The Fed then ordered Wells to compensate certain borrowers between $1,000 and $20,000.
The cities of Baltimore and Memphis also filed suits alleging Wells Fargo engaged in "reverse redlining," or intentionally targeting minority communities for predatory mortgage loans, leading to high foreclosures in minority neighborhoods.
DISPUTE OVER DOCUMENTS
In its Tuesday filing, Wells Fargo said it faced government investigations into whether the bank violated fair lending "and other laws and regulations relating to mortgage origination practices."
San Francisco-based Wells Fargo is the largest servicer and originator of home loans in the United States.
Wells Fargo made a record 33.9 percent of U.S. mortgage loans in the first quarter, as rivals such as Bank of America continued to pull back in the home lending market, according to Inside Mortgage Finance.
Wells Fargo's loan volume was more than triple the 10.6 percent market share of its nearest rival, JPMorgan Chase & Co (JPM.N).
The bank also said it faces investigations into whether it properly disclosed risks related to mortgage-backed securities in offering documents for investors.
In February, Wells said it had received notice that it may face an enforcement action from the Securities and Exchange Commission.
Tension over the investigation became public when the SEC in March accused Wells of repeatedly ignoring its subpoenas for documents and asked a federal court to compel the bank to turn over requested materials. The bank called the maneuver "inappropriate," and a judge has ordered the two parties to try to resolve their dispute.
In its court filing, the SEC said it is looking into whether Wells Fargo made "material misrepresentations or omitted material facts" in offerings it made to investors from September 2006 through early 2008, a period that included the beginning of the financial crisis.
Wells Fargo shares were down 0.9 percent at $33.19 at midday Tuesday on the New York Stock Exchange.
(Reporting By Rick Rothacker in Charlotte, North Carolina, and Aruna Viswanatha is Washington; editing by John Wallace, Dave Zimmerman and Matthew Lewis)
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WF Should be accountable for Misleading homeowners offering Loan Modification when at the end of its review makes any excuse to deny assistance I know this because personally I been suffering to get a Loan Modification with them.The Department of Justice should take a look into Possible Fraud due Wells Fargo’s Loan Modification process because its deceitful promisses to help homeowners.
The bank foreclosed on the sellers of the house we were trying to buy … 5 months into the short-sale process. “Never attribute to malice that which is adequately explained by stupidity.”
We are now trying to buy a non-short-sale property, a Fannie Mae foreclosure actually. There will probably be upwards of 10 bids on it before they stop accepting new bids and make a decision. We’re hopeful, but our agent’s advice is “Don’t stop looking.”
Everyone seems to believe “it’s a buyers’ market” if for no other reason than it is not a sellers’ market.
That is flawed logic because there are more than 2 parties in home sales.
Truth is it is an investment bankers’ market. Don’t be fooled. the big guys are not losing money. They are posting record profits quarter after quarter.
The banks have manipulated the supply in Las Vegas to the extreme.
First they hold up short-sales indefinitely.
That effectively takes more than 1/2 the inventory off the market (even though those properties still show up in MLS).
Second, they control how many foreclosures/REOs they put on the market at once. This is about 1/3 of the inventory.
Fannie Mae controls about 1/10th of the inventory (but a much larger portion of the sales because their foreclosures sell very quickly).
That leaves about 1 in 10 properties being bought and sold by regular people and not banks/investors.
As for the debt side of the banks foreclosure-gate, they simply concentrate the losses into smaller banks which then “fail” and the FDIC steps in and “saves” them by covering their deposits and literally gives the banks’ remaining assets and customers (but not the debts) back to a larger bank!
Yup, here is the FDIC’s page long list of the banks that failed and the big banks that were given over to: http://www.fdic.gov/bank/historical/bank/index.html
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