Wells Fargo Settles Foreclosure Suit with Justice Department for $1.2B
In February, Wells Fargo & Co., the world’s largest bank, agreed to settle a mortgage-lending lawsuit for $1.2 billion. That, however, isn’t even the largest penalty the bank has paid: in 2013, it paid more than $5 billion in settlements and nearly $2 billion in violations. Wells Fargo is just one of many banks fined for similar issues, yet the company still showed a profit last year of $22.9 billion. So what does a settlement like this mean for banking customers?
Good question. The lawsuit arose from the rampant banking practice that sets up home borrowers for failure. The Department of Justice and the Department of Housing and Urban Development alleged that Wells Fargo had knowingly certified certain of its Federal Housing Administration mortgages for HUD insurance when they didn’t qualify for the program. When many of those mortgages failed, Wells Fargo received insurance payouts it had no right to. In other words, Wells Fargo and other banks didn’t particularly care if borrowers could keep up with mortgage payments, because if borrowers defaulted, the federal government would step in and make up the bank’s losses. Meanwhile, struggling homeowners were put through the agony of foreclosure on homes they should never have had mortgages for.
This predatory lending caused the housing crisis of 2008, which in turn caused the economic collapse. The federal government stepped in and took care of the banks, allocating hundreds of billions of dollars in a massive bailout. Cash-strapped consumers got no such bailout.
If all this makes you wonder why you’re struggling so hard to repay the bank for your credit card balance, you’re not alone. The banks got their bailout — at taxpayer expense. And any fines the banks have agreed to pay are a mere slap on the wrist. Their profits have hardly been dented, and they’re perfectly happy to make up the difference by levying new fees on their customers.
At DebtStoppers, we’re interested in getting relief for consumers. Fortunately, you don’t need Congress to pass specially tailored bailout legislation. The U.S. Bankruptcy Code can allow you to discharge some or all of your crushing debt and get a fresh start in life.
For a free consultation and case evaluation, call DebtStoppers at 404.750.4706 or contact our office online.