Wells Fargo & Company (NYSE: WFC), the largest home mortgage lender in the U.S., entered into a $1.2 billion settlement with the federal government to resolve civil claims concerning its Federal Housing Administration (FHA) lending activities, according to a Securities and Exchange Commission filing this week.
The settlement, which includes the U.S. Department of Justice, the U.S. Attorney’s Offices for the Southern District of New York and Northern District of California, as well as the Department of Housing and Urban Development, stems from “certain civil claims” the federal government had pending against Wells Fargo related to its FHA lending program from 2001-2010, as well as other potential claims relating to the company’s FHA lending activities for other periods.
In connection with the settlement, Wells Fargo, following the announcement of its 2015 financial results las month, has provided for an additional legal accrual, which has increased operating losses within non-interest expense by $200 million.
As a result, the company reduced its net income for the year ended December 31, 2015, by $134 million, or $0.03 per common share, to $22.9 billion, to $4.12 per common share.
Wells Fargo is now one of several other lenders, including Bank of America (NYSE: BAC), Citigroup Inc. (NYSE: C) and Deutsche Bank AG (NYSE: DB), which has settled with the government over FHA-related lending.
Quicken Loans, the nation’s largest FHA lender and parent company of top-10 reverse mortgage lender One Reverse Mortgage, remains mired in an ongoing legal dispute with the Justice Department over false claims allegations concerning Quicken’s standards for underwriting and originating FHA-insured loans.
Written by Jason Oliva