U.S. sues Wells Fargo in mortgage fraud case

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PostWed Oct 10, 2012 3:36 am » by 99socks


Let me repeat... IF YOU OR SOMEONE YOU KNOW THINK YOU HAVE BEEN A VICTIM OF MORTGAGE FRAUD OR IF YOU HAVE BEEN FORECLOSED ON, I can help!


Over 80% of mortgages are FRAUDULENT and YOU DESERVE RESTITUTION.



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U.S. sues Wells Fargo in mortgage fraud case

(Reuters) - The U.S. government filed a civil mortgage fraud lawsuit on Tuesday against Wells Fargo & Co, the latest legal volley against big banks for their lending during the housing boom.

The complaint, brought by the U.S. Attorney in Manhattan, seeks damages and civil penalties from Wells Fargo for more than 10 years of alleged misconduct related to government-insured Federal Housing Administration loans.

The lawsuit alleges the FHA paid hundreds of millions of dollars on insurance claims on thousands of defaulted mortgages as a result of false certifications by Wells Fargo, the fourth-biggest U.S. bank as measured by assets.

"As the complaint alleges, yet another major bank has engaged in a longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance," said Manhattan U.S. Attorney Preet Bharara.

Wells, the largest U.S. mortgage lender, denied the allegations and said in a statement it believes it acted in good faith and in compliance with FHA and U.S. Department of Housing and Urban Development rules. The bank said many of the allegations have been previously addressed with HUD and added that its FHA delinquency rates have been as low as half the industry average.

In a regulatory filing in August, the bank said it was being investigated for possible violations of laws and regulations relating to mortgage origination practices, including FHA loans. Wells said it will vigorously defend itself against the suit.

Bharara's office has brought similar cases in the past few years, including one against Citigroup Inc unit CitiMortgage Inc, which settled the case for $158.3 million in February, and against Deutsche Bank, which paid $202.3 million in May to resolve its case.

The U.S. Attorney's office in Brooklyn brought the biggest such case, against Bank of America Corp's Countrywide unit, which agreed in February to pay $1 billion to resolve the allegations.

The Wells Fargo case is brought under the False Claims Act, which provides penalties for fraud against the government, and under the Financial Institutions Reform, Recovery, and Enforcement Act, or FIRREA for short, a little-used statute that has grown in popularity in the past year.

The law requires a lower burden of proof than criminal charges, has a longer statute of limitations than other financial laws and potentially could bring big fines.

A civil fraud unit that Bharara created in March 2010 filed its first lawsuit under FIRREA in December of that year.

DAMAGES AND PENALTIES

At issue In Tuesday's suit are loans Wells Fargo made through a program that allows banks to originate, underwrite and certify mortgages for FHA insurance, according to the complaint. Under the so-called Direct Endorsement Lender program, neither the FHA nor HUD reviews a loan before it is approved for FHA insurance, but lenders are supposed to follow program rules.

Between May 2001 and October 2005, according to the complaint, Wells certified more than 100,000 loans for FHA insurance, even though the bank knew its underwriters had failed to verify information that was directly related to the borrower's ability to make payments.

"The extreme poor quality of Wells Fargo's loans was a function of management's singular focus on increasing the volume of FHA originations (and the bank's profits), rather than the quality of the loans being originated," the complaint said.

The bank also failed to properly train its staff, hired temporary workers and paid improper bonuses to its underwriters to encourage them to approve as many loans as possible, the complaint said.

During a 7-month stretch in 2002, at least 42 percent of the bank's FHA loans failed to actual qualify for the insurance they were submitted for, even though the bank's internal benchmark for such violations was set at 5 percent.

Wells also kept its defective loans secret from HUD, the complaint said. From January 2002 to December 2010, the bank internally identified more than 6,000 "materially deficient" loans, including 3,000 that had defaulted in the first six months, but did not comply with its self-reporting obligations, the complaint said.

Prior to October 2005, the bank did not self-report a single bad loan, and the inadequate reporting continued even after a HUD inquiry that year, the suit states. All told, from 2002 through 2010 the bank self-reported only 238 loans, according to the complaint.

Some of the mortgages Wells Fargo suspected of fraud but declined to report to HUD include loans it separately reported as suspicious activity to the U.S. Treasury Department, according to the suit.

The complaint seeks treble damages and penalties for hundreds of millions of dollars in insurance claims already paid to Wells Fargo, as well as penalties on claims HUD may pay in the future.

Citi, in its settlement, paid $158 million to resolve allegations that a "substantial percentage" of around $200 million in insurance claims failed to meet FHA requirements.

The Wells Fargo complaint also includes specific allegations that the lender failed to report another $190 million in loans it should have flagged as potentially problematic to HUD, which potentially adds to any eventual payout from the bank.

The lawsuit adds to the growing number of civil cases the government has filed targeting conduct that allegedly contributed to the financial crisis.

The Justice Department has indicted few individuals and institutions on criminal charges for roles in the collapse, and officials have said prosecutors determined much of the conduct amounted to greed but not crimes.

A joint federal-state task force set up earlier this year to continue to probe conduct tied to the 2007-2009 crisis has also acknowledged the bulk of its inquiries are under civil law.




http://news.yahoo.com/u-files-mortgage-fraud-lawsuit-against-wells-fargo-202947891--finance.html
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PostWed Oct 10, 2012 9:54 am » by Spock


Just so I have this clear. My home refinance is about 2 years old. I no longer pay the original lender as the loan was sold from that bank to another.

Would that automatically mean fraud has been committed on the side of the bank. And is there any chance I could profit from that fraud and not make anymore mortgage payments?

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PostWed Oct 10, 2012 10:57 am » by Perronick


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PostWed Oct 10, 2012 4:00 pm » by 99socks


Spock wrote:Just so I have this clear. My home refinance is about 2 years old. I no longer pay the original lender as the loan was sold from that bank to another.

Would that automatically mean fraud has been committed on the side of the bank. And is there any chance I could profit from that fraud and not make anymore mortgage payments?



1) Excellent chance that there HAS been fraud. Like, at least 80-90%.

2) If it goes all the way to court, maybe. Most of the time we have found that the banks don't want to bother fighting in court because (at least for us, because most of our time is spent on the research end and not on the litigation end), the banks realize they will lose more if they go to court... So instead, they don't show up in Federal Court, and instead expunge all second mortgages, lines of credit, and (by law) at least 75% of the principal balance left on the original mortgage. Which is great if you're upside-down/ under water/ owe more than it's worth.
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PostWed Oct 10, 2012 4:06 pm » by Spock


What would be the quickest way to know if i could really break one off in their ass?

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PostWed Oct 10, 2012 4:21 pm » by 99socks


Spock wrote:What would be the quickest way to know if i could really break one off in their ass?




If I got a peak at your paperwork, I could give you a preliminary yes or no. Everything goes through my eyes before being sent to the research department, but I am not "the" official yes or no.

There are obvious signs of robo-signing.... New deeds sent to you that have no recording information, notary stamps from the wrong state (or even, look online and find out how many "state" the notary has stamped for). Copies of the Note or the Mortgage that have white spots in the middle of the page, paragraph numbers not in sequential order, or looks photoshopped somehow. If you have anything with CountryWide, MERS, or Bank of America on it, I can guarantee you have a case. An ARM set to LIBOR is soon to be a guarantee. Even more telling I have found, even though it isn't a part of the official paperwork and I don't have access to the electronic databases, is what's in your credit report. How many banks are claiming your mortgage? What months? Follow the account number trail. I've seen mortgages that have been sold 5 times in one month. I have also seen two banks claim the same mortgage, and then let one get discharged through bankruptcy and the next month sell the SAME BAD LOAN to another bank. Like...wtf. :censored:

Most of the time people come to us after they've been given the run-around. Banks love the run-around. They will tell you you can apply for a loan modification to save your house, and then they lose the paperwork or tell you your application has expired and make you go through the process 7 or 8 times. One poor family DID get a modification, only to be sent a letter two months later from the bank, saying they "received" his "request" to no longer be in the program, and that his payments were going up. I know homeowners who have cashed in their retirement accounts, taken huge tax hits on it, give the money to the bank to bring an account up-to-date, and still lose the home (and retirement account). It seems to be their favorite now, to pay your property tax FOR you, and roll the debt it into the escrow, and jack up your monthly payment by 200%. On and on. The crime isn't just in the official documents, the crimes are in the EXPERIENCES and the BULLSHIT and the LIES that the banks put homeowners through to squeeze out the last bit of cash before taking their house and tossing them to the curb anyways.
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PostWed Oct 10, 2012 4:23 pm » by Spock


So you mean my copy of the mortgage? Pretty thick file, any part in particular?

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PostWed Oct 10, 2012 4:25 pm » by 99socks


Lol, ALL OF IT. I have the nice duty of sorting and picking out the note, mortgage, title policy, deed, and last statement from all the rest... but then half the time decide what the heck, this other stuff is better... I haven't yet made a poor choice in that. :D
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PostWed Oct 10, 2012 4:50 pm » by Elnorel


Get a legal council.
Someone who is professional in these matters.
SKEPTIC - One who instinctively or habitually doubts, questions, disagrees with assertions or generally accepted conclusions.
And tries to prove these assertions/claims with scientific facts.

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PostWed Oct 10, 2012 4:52 pm » by 99socks


Elnorel wrote:Get a legal council.
Someone who is professional in these matters.



Umm.. we ARE legal council. And we do this full-time. :D
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