Feds file lawsuit against Wells Fargo for mortgage fraud
Did bank issue faulty loans?
- Duration 3:12
- Date Oct 10, 2012
Did bank issue faulty loans?
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-- and you were that's big news.
The nation's largest home -- is Wells Fargo and now it faces charges that -- hid the truth about thousands of mortgage loans that it certified for federal insurance program.
A mortgage lender hid the truth crazy right.
-- ultimately cost hundreds of millions of dollars when the loans fail.
The feds have now sued Wells Fargo for fraud spanning over more than a decade the -- has since released a statement in the party -- Wells Fargo denies the allegations and believes it acted in good faith and in compliance with federal housing administration and Department of Housing and Urban Development rules.
With -- snow chief business correspondent US news and world report Rick -- -- he's the author of the book rebound years.
How winners have it back how would winners pivot from success that setback to success we did learn -- So will -- in the living room to.
-- you become a little cynical toward the banks of sounds like he's got a little cynical toward everything -- hearing these words all day every day and most of the turnout has been nothing.
Boy you're right it's familiar story I mean a better question I think at this point it's who hasn't been accused of issuing bogus mortgages -- -- the housing bubble but again a familiar story we've seen this happen with other banks.
The government which guaranteed a lot of those loans and that's why it's filing this lawsuit says that Wells Fargo.
It has -- spell this out the Wells Fargo took over Wachovia.
-- -- another troubled lender that happened in 2000 it's -- some of these may go back to Wachovia but a lot of these we're not -- written properly they didn't that though.
That the borrowers they gave mortgages to people who couldn't afford them.
Covered it all up and they were just trying to you know churn out the -- and so on to get them to get get a reading season and packaging these into securities we all know how that happened these were the so called toxic securities.
That blew up during a meltdown in 2000 in 2000 -- -- the government is finally getting around to saying.
You know the FHA the Federal Housing Administration was on the hook basically ensuring these mortgages and it says we want so we want our money back.
Of course the shocking thing is that the government didn't think this might happen when they change rules about back under the Clinton administration.
-- -- say sure that's for sure the irony here of course is that this was all designed in theory to get more people want to -- this was -- was supposed to work well that's right and here's the rub.
All these rules are so are supposed to be self enforcing said the bank's response we don't want to say we police the rules ourselves in that -- doesn't the government doesn't check up on you trust unit.
Get it right when you say these mortgages conform to the standards then of course when I don't they blow up in -- spectacular fashion they have the government come back and say look.
We're gonna put Placer claim on you.
And yet that's how the government set it up and -- when you when you change the rules to that degree for instance if you tell the inmates inside the asylum.
Here the keys and here the guns you guys take care this and then when they blow each other up and -- escaping and you -- dolls -- it's all I don't know surprised by.
Well I mean just -- -- line.
Everybody's complicit in this and every congress wanted to and it isn't really all parties wanted to do this.
I mean honestly you could say the borrower taxpayers -- -- but there are these borrowers are many people who shouldn't -- got alone in the first place they end up worse off because they've had a house for who knows a year three years something like that and had -- default many cases.
I mean we're all worse off the end to this extent that this has destabilize the whole financial system.
About prestige so people now you know we almost had a depression people are still struggling to get loans housing market is still struggling to recover so we're all losers there's time left it might happen -- that -- every night.
Rick thank thank --