Wells Fargo hoped it would help it avoid a very costly sit-down with Preet Bharara, but a federal appeals panel didn’t buy the “we’re just an old-timey stagecoach company that didn’t know we were saddling the government with the bill for all of the bad loans we were making, and oh yea didn’t we already settle this thing already?” argument. Expect another “Bank X To Pay $Y Billion To Settle Mortgage Claims” headline between now and early next year.
While several other big banks have settled with the FHA, Wells Fargo has argued that it should not be sued on this matter as it is protected by a previous settlement. The bank—along with four other large banks—had struck a deal in March 2012 with federal agencies and 49 state attorneys general agreeing to settle certain foreclosure processing abuses. The settlement included a list of hundreds of new standards governing various aspects of the loan modification and foreclosure process. Banks were required to pay $5 billion in fines and to provide consumer relief, including mortgage write-downs and refinancing, valued at $20 billion.
However on Tuesday, the U.S. Court of Appeals in D.C. said that the language in the previous settlement doesn’t make Wells Fargo exempt from being held liable for the government’s October 2012 claims. A district court previously ruled against Wells Fargo on the issue.