The following is an announcement by the Federal Reserve Wednesday regarding a civil penalty against Wells Fargo:
The Federal Reserve Board on Wednesday issued a consent cease and desist order and assessed an $85 million civil money penalty against Wells Fargo & Company of San Francisco, a registered bank holding company, and Wells Fargo Financial, Inc., of Des Moines. The order addresses allegations that Wells Fargo Financial employees steered potential prime borrowers into more costly subprime loans and separately falsified income information in mortgage applications. In addition to the civil money penalty, the order requires that Wells Fargo compensate affected borrowers.
The $85 million civil money penalty is the largest the Board has assessed in a consumer-protection enforcement action and is the first formal enforcement action taken by a federal bank regulatory agency to address alleged steering of borrowers into high-cost, subprime loans.
Wells Fargo Financial–a once-active, non-bank subsidiary of Wells Fargo–made subprime loans that primarily refinanced existing home mortgages in which borrowers received additional money from the loan proceeds in so-called cash-out refinancing loans. The order addresses allegations that Wells Fargo Financial sales personnel steered borrowers who were potentially eligible for prime interest rate loans into loans at higher, subprime interest rates, resulting in greater costs to borrowers. The order also addresses separate allegations that Wells Fargo Financial sales personnel falsified information about borrowers incomes to make it appear that the borrowers qualified for loans when they would not have qualified based on their actual incomes.
These practices were allegedly fostered by Wells Fargo Financials incentive compensation and sales quota programs and the lack of adequate controls to manage the risks resulting from these programs. These deficiencies allegedly constitute unsafe and unsound banking practices and unfair or deceptive acts or practices that are prohibited by the Federal Trade Commission Act and similar state laws. In agreeing to the order, Wells Fargo did not admit any wrongdoing. The order requires Wells Fargo to compensate borrowers affected by these practices. To identify prime-eligible borrowers with cash-out refinancing loans who were subject to improper steering, Wells Fargo is required to reevaluate the qualifications of all borrowers who took out a subprime, cash-out refinancing loan between January 2006 and June 2008 to account for certain specific steering techniques. To identify Wells Fargo Financial borrowers whose income information was falsified without their knowledge, Wells Fargo is required to set up a procedure for potentially affected borrowers to show that their actual income at the time did not qualify them for the loans they were granted. Wells Fargo is required to provide notice of this procedure to all borrowers who obtained cash-out refinancing loans between January 2004 and June 2008 at a Wells Fargo Financial office where there is evidence that sales personnel at that office altered or falsified borrowers income information.
These compensation plans must be approved by the Federal Reserve. An independent, third-party administrator will review determinations about the eligibility of individual borrowers for compensation and the amounts of compensation provided. The Federal Reserve will also monitor compliance with the approved plans. Failure to comply with the plans will constitute a breach of the cease and desist order.
The amount of compensation provided to individual borrowers will depend on a number of factors, including differences between what borrowers paid and what they should have paid in terms of origination points, interest payments, fees, and penalties. Until specific determinations of harm to individual borrowers are made, it is difficult to determine the total amount of compensation provided to borrowers. Based on preliminary estimates, the amount of compensation that each eligible borrower will receive ranges between $1,000 and $20,000, but some eligible borrowers may receive less than $1,000 and others may receive more than $20,000. The number of borrowers who may receive compensation under both plans is estimated to be between 3,700 and possibly more than 10,000.
Further information for borrowers may be found at www.wellsfargo.com/mortgage.
In addition to the monetary components of the settlement, Wells Fargo is required to improve oversight of its anti-fraud and compliance programs and incentive compensation and performance management policies for personnel who sell and underwrite home mortgage loans. The Board
also has issued consent orders against 16 former Wells Fargo Financial sales personnel prohibiting them from becoming employed in the banking industry. The Board has also issued a consent cease and desist order against another former Wells Fargo Financial sales person prohibiting future improper conduct.
Cease and Desist Order Below…
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4closureFraud.org
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In the Matter of: WELLS FARGO & COMPANY and WELLS FARGO FINANCIAL, INC.
What’s wrong with falsifying information.
Signed,
All The Other criminal FDIC-member banks that do it
Judges
Their Attorneys
Congressmen
Most BARs
Wait a minute, Wells Fargo does not do anything bad. They never commit fraud.
Signed,
All The Others
WTF. ?! ? 85M is the fine associated with a main ingredient of the covered up fraud responsible for whole national and worldwide economic collapse? 85M ought to be the fine for each family that was unjustly kicked onto the street. 85M ought to the fine paid to each of our trading partners overseas who bought those bogus securitizations of so-called high yielding mortgage backed securities. 85M ought to be what we stuff down the throat of every central banker so associated until they burst. 85M !? 85M !? We don’t need no stinkin’ 85M !
Where’s the handcuffs?
Let’s go after WAMU, too! In 2001 a WAMU guy, Jack Wiadro out of their Ft. Myers office, tried to get me to falsify my income on a refi application. When I refused he mailed me the paperwork, held back the income page, and then filled it in himself (!!!) after I returned it. The day before the refi was to close his office called to confirm, among other things, my income. The sh*t the fan and I raised hell. Jackie boy called a couple hours later, seemingly in tears, saying he’d lose his job if I didn’t play ball. Shoot, I’d already called Kerry Killinger’s office in Seattle to tell Kerry all about it – I thought Kerry should know! Ha! The order probably CAME from Kerry, know what I mean?
Then I had to get a horrible loan (15-year fixed, 8.75) and a couple months later, WAMU started “servicing” the loan.
Oh, the misery.
We need to claw back from top WAMU officials, and then go after Chase.
This is what I don’t understand….WAMU is like back out in the back forties…very little is said about that outfit…the commission, Senator Levin, fraud reeked throughout the mortgages and the CEO’s,( both that left in 2008.)..knew of the frauds and did nothing…yet..NOTHING was done to them..both making millions that same year they left. All this fraud and crap, where did it go.. what was done with it…filed away in some warehouse in India????? So Chase and the FDIC planned the sly sneaky takeover purchase…was this ever settled and signed??? If not..just how is Chase even collecting payments or even foreclosing on something they do not own…the last I heard they had not signed the purchase agreement and the FDIC was contesting the law suit. In the transfer of the mess with WAMU and Chase …Chase sent a letter to a homeowner ” that they were the new servicer , that’s it, to their loan “. Exact words. Yet, in the foreclosure they failed to prove they had standing….told to prove and summit again…same documents summited so a request to produce was filed in court…just shy of 10 months later they file a response..all 25 requests were denied on ‘ objection ‘. Now this homeowner is fighting Chase who has shit, knows shit and cannot prove shit…..What other way can one say it…Why are these WAMU CEO’s with their many millions off enjoying life when the whole crap started with them and they approved of the frauds….NOT FLAWS…FRAUD….Jamie Dimon needs to know there is a difference between FLAWS AND FRAUDS…. we are many steps ahead of him at this point. AND does the Federal Reserve not know that ALL the BIG BANKSTERS have done the same pattern as Wells Fargo? It was a blueprint they all followed..a ploy….and the Federal Reserve knew of all the frauds and schemes long before the bubble burst. So who really cares what any of them are fined…big deal…that is not of our concern…it is what was done to millions of homeowners….so they can stick the fines where the sun don’t shine……….