Wells Fargo Fined $85 Million Over Subprime Lending

Wells Fargo & Co. (WFC) has agreed to pay $85 million to settle civil charges that it falsified loan documents and pushed borrowers toward subprime mortgages with higher interest rates during the housing boom.

The fine is the largest ever imposed by the Federal Reserve in a consumer-enforcement case, the central bank said Wednesday.

Wells Fargo, the nation's largest mortgage lender, neither admitted nor denied wrongdoing as part of the settlement. The bank agreed to compensate borrowers who were steered into higher-priced loans or whose income was exaggerated.

The Fed alleged that Wells Fargo inflated borrowers' incomes on loan documents to qualify for mortgages they otherwise couldn't afford from 2004 until 2008. Wells Fargo sales personnel also pushed borrowers toward higher-interest, subprime loans, even though they were eligible for lower-interest mortgages, the central bank said.

Between 3,700 and roughly 10,000 people could be compensated under the settlement, the Fed said. The payments will likely range from $1,000 to $20,000.

The alleged actions by Wells Fargo are similar to accusations made against many subprime lenders during the housing boom. Hundreds of those smaller lenders went bankrupt when the housing market collapsed in 2007.

Millions of homeowners who took on subprime loans during the housing boom have since lost their homes to foreclosure.

Attorneys general in all 50 states and the District of Columbia are jointly investigating whether lenders cut corners and improperly handled hundreds of thousands of foreclosure cases over the past several years.

Many lenders, including Bank of America, temporarily halted their foreclosure cases in October after allegations surfaced that employees signed but didn't read documents that may have contained errors.

Wells Fargo also admitted it had made mistakes in thousands of foreclosure cases and promised to fix them. But it did not stop its foreclosures.

Both lenders say they're fixing the problems.

In April, more than a dozen lenders and servicers singled out by the Federal Reserve were ordered to hire independent auditors to figure how many homeowners may have been improperly foreclosed upon in 2009 and 2010. As part of agreements, the financial firms will "remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies."

Federal regulators and state attorneys general are meeting with banks to try and strike a settlement that will significantly change the mortgage industry, forcing lenders to modify more mortgages and provide greater protections for borrowers. A final agreement is not expected for several months.

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Greg

Fellow Americans, Wells Fargo won't spend a dime of their own money in this settlement. This is our tax money being used to support those people who signed up for a mortgage that they could never afford in the first place.

July 28 2011 at 11:40 AM Report abuse rate up rate down Reply
bathingndasea

Had to switch to wellsfargo because that was the only bank that was in both the states I have to be. What a crap bank. They try to hit with $10 fees all the time. Until you notice it and have to go in to the bank to find out why,they then credit your account. I've seen where people are in the red with these rip off fees and then have a bigger problem. Wells fargo is the worst bank I have ever dealt with. They make u save $25 a month to get free checking only for you to go to the bank and transfer it back to your checking the next day. They are hoping you have a low balance that would give you more fees. Its a shame these big companies are so shady. AND with peolpe that have nothing they take more. How do you live with that? They must have ceo's that are made of stone.....They make up rules as they go along...WELLS FARGO BLOWS

July 26 2011 at 11:38 AM Report abuse rate up rate down Reply
mabney0000

I agree with all the comments on this post, however, until we all stand united on boycotting, raising gas prices, NAFTA, illegal immigration, stiiffer punishment on capital crimes our country is in the hands of thugs! WE have to stand up and fight. Don't borrow ANY money from anyone! Pay cash, hell the gov't wouldn't know what to do if we quit borrowing and paid for what we need instead of what we want! Folks gotta start somewhere? ps. take control of our youth and thier liberties to social network, its outa control. It breeds insanity.

July 22 2011 at 1:07 AM Report abuse rate up rate down Reply
kcary56173

jlet...good job...if you didint make one payment and broght the rv back. This would be 1st payment default and the dealership would have to pay off the loan. Stick it to em buddy...

July 21 2011 at 10:23 PM Report abuse rate up rate down Reply
kcary56173

Wells Fargo (hate em) they will get the 85 million back in nickle and dime fees. Im seeing it already. I loved Wachovia...Wells Fargo can go rot.

July 21 2011 at 10:20 PM Report abuse rate up rate down Reply
sf1000000

Hell will freeze over 1st before they FIX or Even 1 single consumer gets a DIME. So tell me Wells and FDIC and et al, where do these people GO to get their lives BACK !!???
Next just how much did they make compared with this penalty?? Is it like, we made 1Billion and are giving back 85 Million and keeping the REST???
When will the punishment FIT The crime? Jail? People at the top end of the food chain loosing their jobs? How about spending some time with Bernie Madoff...in JAIL.

July 21 2011 at 5:05 PM Report abuse rate up rate down Reply
mly911s

probably stole 10x's thaty amt & giving back a piece of what they stole.....good job

July 21 2011 at 10:55 AM Report abuse +1 rate up rate down Reply
jlet37

The fine is not big enough to make up for the damage this bank has caused thousands or millions of customers over the years. $85 Billion would have been a much better and more fair settlement.

July 21 2011 at 10:10 AM Report abuse +1 rate up rate down Reply
jlet37

Why does this not surprise me? Wells Fargo was the lender on a used RV I purchased that the documents were falsified on after I signed them. A credit insurance policy for $7,000.00 was tacked onto the signed sales papers after I left the dealership, and had taken possession of the RV. I was told the documents would be sent to me in a few days after the dealership's office had a chance to record them. In the meantime I drove the RV off the lot, across Seattle, and over to the peninsula to prepare it for a trip across the state. I then took it on a lengthy trip of several weeks thinking everything was A-Ok with the paperwork. When I arrived back home the papers were waiting for me in the mail. When I saw that a $7,000.00 credit insurance policy had been written in without my approval, and the monthly payment amount had jumped by three figures I was livid. I took the papers and the RV back to the dealership, and demanded they correct them or deal with the state attorney general's office. They laughed in my face. With that I took the RV back home, cleaned it out, and up, arranged for a ride home, then took the RV back to the dealership, parked it without their knowing what I was doing, marched in and slammed the papers on the sales managers desk under his nose, and walked out. They had already destroyed my credit by reporting the sale to the credit agencies making it too late for me to prevent it from being reported by the time I took the RV back. They and Wells Fargo knew what they were doing all along. They were in bed together. I suspect they had done this to other customers before and those that came after me.

July 21 2011 at 10:05 AM Report abuse rate up rate down Reply
alremax

yes bank doing wrong thing, but what about home owner, they making money from rent, but not paying mortgage year after
year,and that is the reason so many home owner like to go short sale,renting the property after 3/4 year close as a short sale
bank need to stop giving that much time,unless it will never stop from home owner.this way million of home owner who have 3/4 house buy with out no money down,now renting 3/4 year but no mortgage payment.

July 21 2011 at 9:52 AM Report abuse rate up rate down Reply