Denver, CO, 06/11/2014 (Stocksntrade) – The U.S appeals court declined Wells Fargo & Co (NYSE:WFC) attempt to escape the lawsuit filed against the company by the government. The government alleged WFC for showing misconduct related to home mortgage loans that are issued by the Federal Housing Administration. This Federal Housing Administration lawsuit was filed in Manhattan federal court in October 2012, and it claimed that the bank made some substandard mortgages which led to defaults covered by the agency’s insurance. WFC asked the federal court to enforce the 2012 multibank mortgage settlement and requested to bar all the claims in a recent New York lawsuit owing to this settlement. WFC, certainly, is disappointed with court’s decision as it took the case to the court in light of its long-standing record of responsible lending.
Other Banks Paid; WFC Decided To Fight
Besides Wells Fargo & Co (NYSE:WFC), three other banks were also involved in 2012 national settlement and they all by the end paid a total of almost $2 billion to resolve complaints that were similar to that of WFC’s. But WFC decided to fight. A banking analyst at FBR Capital Markets Corp in Arlington, Virginia made a statement, suggesting his view on the case that nobody thinks that WFC can win this case. This was pretty blunt! But it seems that he is correct in his notions because recently, the appeals court clearly said that according to the settlement language, separate claims had to be made.
Rulings From Both The Sides
The U.S put forth its argument saying that the settlement was limited to claims that were based on annual declarations made by Wells Fargo & Co (NYSE:WFC) to FHA and its Department of Housing and Urban Development overseers. But the bank had a counter-argument that in those certifications, it had the necessary safeguards in place to give mortgages under the FHA loan-guarantee program. WC also mentioned that the release freed it from its responsibilities for any company wide conduct that allegedly provided the false annual certification.