Wells Fargo Agrees to Pay $2.09 Billion Penalty for Allegedly Misrepresenting Quality of Loans Used in Residential Mortgage-Backed Securities

08/01/2018 12:00 AM EDT
The only thing I would add to what Dan Edstrom says below is that the courts are still treating WFB as a credible source and applying legal presumptions to its fabricated documents. This enables WFB and the other banks that committed the same atrocities to “skip” actual proof of an unprovable case. WFB has admitted to lying, cheating and outright fraud on a system wide basis. Why would you “trust” any company with that track record and give them the benefit of the doubt (a legal presumption) on paper isntruments that are challenged by a homeowner?
From Dan Edstrom:
Fraud, falsification, mail fraud, wire fraud, financial services fraud, financial institution fraud, violations of SOX requirements, violating the requirements for complying with SOX and providing false or misleading information to investors, etc.  And note that the CEO and Chief Financial Officers probably signed documents every single year stating they had adequate internal controls in place and they were required to disclose any material exceptions uncovered by their internal controls. These SOX violations are both criminal and civil in nature.   Note that half of the 73,000 or so loans had defaulted.
Note that this ties in closely with the other damages Wells Fargo was ordered to pay borrowers for. In that case the conduct was Wells Fargo Bank taking mortgage applications over the telephone and entering in completely false income information. This press release does not list the details of who took the mortgage applications. There is a very good chance that Wells Fargo falsified this information themselves.  And their supposed “internal controls” uncovered the problem, but they apparently have no internal controls to “control” what happens when their internal controls identify a problem.
And where are the big accounting firms that are auditing Wells Fargo and these types of companies? Don’t they review the internal controls and the issues that arise from these controls?
And notice that their conduct was completely intentional and they had full knowledge, as they did not hold these loans on their balance sheet. They off-loaded them to others while knowingly misrepresenting the loan to debt ratios.

27 Responses

  1. @ Kalifornia – Now those sound like good cases. I hope those people find good lawyers and fight it. Those cases would have merit. (Caveat that in some jurisdictions, they still might not succeed. With the right lawyer, in California, about a 50% chance; wrong lawyer or no lawyer = no chance).

  2. Read the settlement or consent agreement to determine the payees.

  3. Refinance, restructure, loan mod, work-out — all the same thing IF it is claimed to be in one of the bogus trusts.

    Doesn’t matter what they call it — the debt buyer is concealed.

  4. Given my mod is worded: closing costs, administrative paperwork, document filing…I suggest it is a refinance. So, given in 2018 the note is still in New Century’s name, New Century must have done the re-fi, LMFAO. I don’t think so…good old Ocwen at it! And I have a claims in State court, being heard tomorrow…with the substitute trustee, the other for double the amount, filed with the Federal Court with the “agent” (different party) both from US Bank, NA and Ocwen as the attorney-in-fact for New Century, as the servicer. Let the games begin!

  5. Thanks Ian —

    Roger — If you have Wells named directly – likely it is Freddie or Fannie.

    I am looking for loan mods where the original lender is now defunct.

    I have been told by some that there will be a new investor by the loan mod. But that investor is not disclosed. Cannot confirm this. However, this suggests a “new” investor agreed to — or rejected — the loan mod request. Which means any foreclosure would have been false as to standing, and the loan mod if granted conceals the identity of agreeing party. .And, a rejection of loan mod is by undisclosed party.

    Nevertheless — as to above, title is destroyed.

    And to ask again, where were the other 49 states during this ridiculous settlement agreement? Only CA was stupid enough to agree to — or, were the other states kept out of the loop?
    What gives??

  6. @ ALL (even the Silly Seal)

    PHILADELPHIA (CNN) – Hundreds of people had their homes foreclosed on because software used by Wells Fargo incorrectly denied them mortgage modifications.

    The embattled bank revealed the issue in a regulatory filing this week and said it has set aside $8 million to compensate customers affected by the glitch.

    Trump Election Commission: No Evidence Of Widespread Voter Fraud Found

    The same filing also disclosed that Wells Fargo is facing “formal or informal inquiries or investigations” from unnamed government agencies over how the company purchased federal low-income housing tax credits. The document states the probes are linked to “the financing of low income housing developments,” but does not offer further details.

    Reuters first reported news of investigations and mishandled mortgage modifications on Friday.

    Wells Fargo said the computer error affected “certain accounts” that were undergoing the foreclosure process between April 2010 and October 2015, when the issue was corrected.

    About 625 customers were incorrectly denied a loan modification or were not offered one even though they were qualified, according to the filing. In about 400 cases, the customers were foreclosed upon.

    Wells Fargo did not respond to an inquiry from CNNMoney on Saturday.

    Insomnia Cookies Offers Free Cookies On National Chocolate Chip Cookie Day

    Wells Fargo has been mired in a series of scandals in recent years that have cost the firm billions and left it facing a string of lawsuits and investigations.

    Earlier this week, the Justice Department announced Wells Fargo agreed to pay a $2.1 billion fine for issuing mortgage loans it knew contained incorrect income information. The government said the loans contributed to the 2008 financial crisis that crippled the global economy.

    In June, Wells Fargo was accused by the federal Securities and Exchange Commission of using complex financial investments to take advantage of mom-and-pop investors. Wells Fargo, which neither admitted nor denied the SEC’s allegations, said at the time it “cooperated fully” with the SEC probe.

    One of its most far-reaching scandals involved the creation of millions of fake accounts the company created for unsuspecting customers in order to boost its sales figures. The scope of that issue ballooned since the practice was first uncovered in September of 2016.

    The bank has also admitted to hitting customers with unfair mortgage fees and charging people for car insurance they didn’t need.


  7. ANON- I believe that when modifications were drawn up “back in the day” of traditional mortgage verbiage, that the modification would of course name the original lender, usually bank or S&L nearby, as the new
    Lender on the modified instrument.
    Now, in the current version of mortgage lending, it becomes increasingly opaque as to who was the lender or creditor immediately prior to the modification being granted.
    And for that reason, and according to any available agency law/ rules as to legally-binding modifications, I would venture to guess that the lions share if any current modifications are in violation of any number of rules and laws. I’ll have to look at mine if I can find it.

  8. ANON: my modification renames Wells as the “lender”, and most mod agreements did exactly that.

  9. And see below — modifications are referred by mortgage underwriting
    How many more at Ocwen, and other “servicers.” Servicers for WHO????? Federal programs??

    CHARLOTTE, N.C. (AP) — Wells Fargo says a company mistake contributed to hundreds of foreclosures because it miscalculated customers’ eligibility for mortgage modifications.

    The bank said in a filing Friday the error caused about 625 customers to be denied, or not offered, loan modifications they otherwise qualified for. Foreclosures were completed in about 400 cases.

    The customers had been using federal programs that helped families at risk of losing homes. A spokesman didn’t immediately respond to a question about where the foreclosures were.

    The error in the bank’s underwriting tool lasted from 2010 until it was fixed in late 2015, an internal review found.

    The bank said it set aside $8 million this year to help the affected customers.

    With its main corporate office in San Francisco, the bank employs thousands in Charlotte.

  10. The government only suggests modification. Can anyone here explain who is the mortgage owner/holder when a modification is completed?
    No one has been able to answer this question.

    As I understand it, a modification is simply a modification of the original contract with the original Lender. Most of those so called Lenders are gone. .

  11. Rules being made up to deprive of us of property and due process. No matter what we figure out they get fined and never address harm done to us except for investors and the government. Pretender mender is Garfield’ s term. Can we sue for breaking settlement agreement or start suing agencies/govt in conspiracy with banksters for violating our rights.

  12. My loan is specifically in the vintage specified and appears in both the WFHET 05-2 and the WFMBS 05-7.
    How is that?
    Easy! Wells was Custodian for these transactions, meaning they held the collateral files and could pledge payment streams via non-identifying information (remember, bondholders and securities underwriters unable to be disclosed that info) to multiple securities. Fake accounts? you betcha!

  13. Poppy, exactly what they did in Wisconsin. No chain of title, no UCC, no testimony or evidence of transfer OR consideration for the bank to gain summary judgment. Criminal conspiracy within the judiciary here in Cheeseland.

  14. The more paperwork I look at and the more savvy I hope I am becoming,these notes are being treated as, bearer paper/instruments. There is no bearing instruments in REMICS…the rules are very, very specific. Over and over…the language is “Holder”…assigns, sells, transfers, etc…which is it fellas? Deception everywhere.

  15. The OCC was made aware of Wells Fargo illegally foreclosing on Dept of VA and FHA borrowers by Wells in 2011, however they are part of this RICO thing that Wells and Ginnie Mae got going on. Wells since at least Sept 25, 2008, been running this Ponzi scheme of these WaMu loans were they illegally foreclose and collect payment they got no rights to in the remaining part of the 1.3 million WaMu FHA & VA loans that were not and could not be involved in the sale to JPMorgan because Ginnie had already seized those loans in the remote bankruptcy procedure!

  16. Reblogged this on Site Title.

  17. This settlement is for till 2015 but the crime continue for year after such as my residence I lost it last oct. 2017 is it going to be another setlment?

  18. And every civil and criminal agengy related to real estate and fraud is ignoring the crimes right in front of them. Didn’t Mr. Garfield have a term for this phony oversight and enforcement?

  19. You already answered it – those who pretend they fine Wells Fargo after they gave Wells Fargo $301 billion in bailouts. $600+ Trillion Ponzi scheme; forgery mill in Minnesota? 3.5 million accounts were not discovered for a DECADE by the Government? Give me a break.

  20. Wells Fargo & Wachovia got over $301 BILLION from $29 Trillion 2007-2010 bailouts – and returned about $8 billion total-likely from their insurance funds. Which are already written off all books and taxes as “business losses”.

    At the same time WFB stole and illegally resold millions of properties and laundered trillions of dark money through US Court system.

    Most recently Wells Fargo “settled” 3.5 million frauds when they paid $35.00 per fraudulent account. Lawyers got 21 million from this bogus settlement in legal fees.

    Attorney Generals got billions – from National Mortgage Settlement – which disappeared in their hands; consulting companies got billions.


    I am wondering for how long this mockery of justice will last before it collapse the Country?


  21. @ ALL

    Here’s the link to the settlement agreement:


  22. How can we get a copy of this “Agreement”?

  23. Am wondering today if a Summary Judgment would require execution of the blank endorsement in behalf of the plaintiff before being valid? Courts are also letting them walk away with these notes, ostensibly still negotiable on open market (and apparently some sold again to debt collectors now posing as plaintiff). Notes should be surrendered to court upon judgment, I believe.

  24. Nothing in this for the people. Come on California — only state to be involved with this settlement —- YOU COULD HAVE DONE MUCH BETTER THAN THIS. More funds to divert to your own disaster budget?

  25. D— Right . Fines, and settlements, no perp walks, no Rikers Island, and the owners / renters struggle on – legal fees, late fees, unaffordable
    legal counsel ( respect to all the legal pros who follow this blog and spend too much time reeducating the Bench on long standing codes, laws and ordinances, etc. an expensive dirty task, no doubt ) Forget the Russian hackers and Pres. Trump’s romantic dalliances from yrs. ago, reward the harmed, homeless, often financially helpless who trusted ” pretender lenders ” and now are paying into some bank created black hole.

  26. Where my issue is that WaMu enter into the servicing agreement with Wells on Jul 31, 2006, and continues today however as WaMu who stop having any authority over these WaMu Ginnie pooled loan (FHA & VA) as the transferring of the servicing took the physical possession out of WaMu hands and shows the physical possession by Ginnie with Wells acting as custodian of records.

    We know from the fact that 95% and over FHA & VA loans are enrolled in the Ginnie MBS pooling system that requires UCC3 sign blank endorsed Notes and form HUD 11711A Release of Security Interest without a legal remedy to reunite the Notes with the debt as the possessor of the blank Notes has not purchased the debt which is needed to call the loan due under UCC9.

    Ginnie not authorized by US Congress to purchase any mortgage loans ever, and are not the originator of any mortgage loans or MBS and cannot buy or sell the mortgage loans or invest in MBS. So when they take possession of the Notes it causes the Notes to be non-negotiable.

    The Notes have been seized when Wells Fargo purchased the building housing the 1.3 million loans on Jul 31, 2006 years before they were shut down by the OTS and declared a “failed bank” by FDIC and could not and were not involved in the sale to JPMorgan bank on Sept 25, 2008.

    As WaMu is no longer a member of MERS and Ginnie not a member as a lender and having no rights under a contract/note that they are not listed anywhere in as a party too, cannot get around UCC9 with a non-judicial foreclosure as it or Wells must as a non-originator present proof of purchase to call these loans due plus they cannot continue collecting monthly mortgage payments as they are not owed a debt!

    You got this $70 billion Ponzi scheme so far, going on over a decade-long, that makes it appear that the WaMu Ginnie MBS is still valid instead of in default it because on Sept 25, 2008!

  27. Fines are being paid and enriching whom? Not one homeowner out out 10 million, plus have been compensated. No investors have been made whole, either. Where is the money going? As this moves along, I figure, correctly, everyone in the system knows what’s going on and condones it. The real question is: why and who is getting rich from it?

Leave a Reply

%d bloggers like this: