FHA Lawsuit Of Wells Fargo Upheld

FHA’s ability to sue Wells Fargo for “reckless origination and underwriting practices, that caused FHA to experience hundreds of millions of dollars in federal insurance payouts” has been upheld by the U.S. Court of Appeals. Wells Fargo had earlier entered into a 5 bank “limited settlement” of approximately $5b with FHA on another FHA suit and maintained that the settlement agreement in that case barred FHA from bringing additional lawsuits against the San Francisco based mega bank. 3 of the other 4 banks settled similar claims for about $2b.

So, while a multi-billion dollar settlement to FHA is eminent, it is not going to be anywhere near the hundreds of billions of dollars that FHA maintains it lost. It will be interesting, however, to see how much more settlement dollars it will cost Wells to put up this fight.