HONOLULU (HawaiiNewsNow) - Wells Fargo agrees to pay $1.2 billion to settle claims it engaged in mortgage fraud. The charges date back to the 2008 mortgage crisis, when megabanks broke the economy. What went wrong back then was two steps: lending to people who couldn't afford the payments, and bundling those mortgage notes and reselling them as investments, lying about the risk.
Wells Fargo, the nation's largest mortgage lender, is getting hit on the first part. Bank of America, which bought Countrywide Financial afterward, settled earlier. The original lawsuit accused Wells Fargo of "reckless" mortgage lending practices. It failed to report thousands of loans that didn't meet federal requirements. The suit said Wells Fargo also failed to properly review early payments defaults. The settlement agreement is still being drafted.
We might know more at the next court hearing on February 17.