Wells Fargo lied about the quality of thousands of loans it certified for a federal insurance program, a decision that ultimately cost the government $190 million in claims when those loans failed, according to a civil lawsuit filed by federal prosecutors on Tuesday.
From Jan. 1, 2002 through Dec. 31, 2010, Wells Fargo intentionally concealed the problems with 6,320 loans it had determined were "seriously deficient" from the Federal Housing Administration, which insured the loans, according to the complaint filed in Manhattan federal district court. The bank didn't report the problems with the loans even after its own risk department conducted reviews that according to one bank employee, unearthed "a dirty underbelly of bad loan officers," the lawsuit claims.
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