The U.S. Justice Department said Wednesday it is fining Wells Fargo more than $2 billion for mortgages it made and sold to investors in the run-up to the financial crisis, the latest blow to the San Francisco-based bank.
Wells agreed to pay the $2.09 billion penalty to settle allegations it knowingly misrepresented the quality of the residential loans, which cost investors billions of dollars when they soured, the Justice Department said.
“Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans,” Alex Tse, acting U.S. Attorney for the Northern District of California, said in a statement. “Today’s agreement holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted.”
Wells Fargo agreed to pay $2.09 billion to settle charges by the Justice Department that it knowingly sold residential-mortgage loans to investors containing false income information. The crisis-era loans, tens of thousands of which defaulted, “did not meet the quality that Wells Fargo represented,” the DOJ said. The bank has faced multiple scandals over sales practices, including one involving opening millions of fake accounts that resulted in Federal Reserve sanctions.