Wells Fargo to pay U.S. $108 million over veterans’ loans

 

Wells Fargo to pay U.S. $108 million over veterans’ loans

(Reuters) – Wells Fargo & Co (WFC.N) will pay the U.S. government $108 million to settle a whistleblower lawsuit claiming it charged military veterans hidden fees to refinance their mortgages, and concealed the fees when applying for federal loan guarantees.

The third-largest U.S. bank on Friday said the accord resolved claims that its Interest Rate Reduction Refinance Loans should have been ineligible for guarantees under a U.S. Department of Veterans Affairs loan guaranty program.

Such claims were raised in a lawsuit filed in 2006 and made public in 2011, in which Georgia mortgage brokers Victor Bibby and Brian Donnelly sought reimbursement for losses that the government suffered on guaranteed loans that went into default.

Similar claims were brought against other lenders, including Bank of America Corp (BAC.N) and JPMorgan Chase & Co (JPM.N), and sought to recoup millions of dollars of taxpayer funds used to cover the losses. Some of these lawsuits have been settled.

“We are committed to serving the financial health and well-being of veterans,” Wells Fargo Chief Executive Tim Sloan said in a statement. “Settling this longstanding lawsuit allows us to put the matter behind us and continue to focus on serving customers and rebuilding trust with our stakeholders.”

Wells Fargo has in the last 11 months been addressing fallout from other practices, including a scandal over its creation of unauthorized customer accounts, and its charging of borrowers for auto insurance they did not want or need.

In 2011, it reached a $10 million settlement in a separate class-action lawsuit claiming it imposed excessive closing costs on about 60,000 refinancing loans for veterans.

Friday’s settlement is also notable because the government declined to help Bibby and Donnelly pursue their lawsuit under the federal False Claims Act. Such intervention often results in larger settlements.

James Butler, a lawyer for Bibby and Donnelly, declined immediate comment.

False Claims Act lawsuits let private whistleblowers sue on behalf of the government, and share in recoveries.

The case is U.S. ex rel. Bibby et al v Wells Fargo Bank NA et al, U.S. District Court, Northern District of Georgia, No. 06-00547.

Reporting by Jonathan Stempel in New York; Editing by Bill Rigby and Grant McCool

Published at Fri, 04 Aug 2017 16:54:32 +0000

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