Wells Fargo to Pay $85 Mil for Pushing Risky Loans

July 21, 2011

Wells Fargo & Co. faces the largest fine ever imposed by the Federal Reserve over charges that the mortgage lending giant steered borrowers toward higher-priced loans during the housing boom.

The Federal Reserve announced that it has reached an $85 million settlement with Wells Fargo, the nation’s largest mortgage lender, over the charges. Wells Fargo did not admit to or deny wrongdoing when agreeing to the settlement.

The Fed has accused the bank of steering borrowers into subprime loans with higher interest rates, even when borrowers qualified for lower interest rate mortgages. It also accused Wells Fargo, from 2004 to 2008, of inflating borrowers’ incomes on loan documents so they’d qualify for loans they otherwise would not have been able to.

Anywhere from 3,700 to 10,000 borrowers may receive payments from $1,000 to $20,000 under the settlement, the Fed said.

Source: “Wells Fargo to Pay $85 Million to Settle Charges That it Steered People Toward Risky Mortgages,” Associated Press (July 20, 2011)

Read more:
Countrywide to Issue Thousands of Home Owners Refunds