Wells Fargo & Co. (WFC:US), the biggest U.S. home lender, must face a lawsuit that accuses the bank of overcharging veterans under a federal loan-refinancing program, a judge ruled.
U.S. District Judge Amy Totenberg in Atlanta denied Wells Fargo’s bid to dismiss the complaint filed by two mortgage brokers, saying their allegations are “plausible and sufficient,” according to a decision filed yesterday.
The plaintiffs “have made factually specific allegations regarding mechanics of defendant’s routine practice of creating false documents and making false statements to the VA in order to obtain guarantees on loans,” Totenberg wrote.
Wells Fargo and other lenders were accused in an amended complaint last year of defrauding veterans and the U.S. out of millions of dollars under a U.S. Department of Veterans Affairs loan refinancing program. The lenders overcharged veterans and concealed their conduct from the government to obtain guarantees for the loans, according to the filing.
The mortgage brokers, Victor Bibby and Brian Donnelly, filed the complaint as whistle-blowers.
Vickee Adams, spokeswoman for San Francisco-based Wells Fargo, said the bank will “vigorously defend” itself in the lawsuit.
Five banks that were sued in the case “recently” agreed to settle claims, according to a statement yesterday by lawyers for the plaintiffs.
Bank of America Corp (BAC:US).’s Countrywide unit agreed to pay $45 million; PNC Financial Services Group Inc. (PNC:US) will pay $38 million; SunTrust Banks Inc. (STI:US) agreed to a $10.2 million settlement; Citigroup Inc. (C:US) is paying $7.5 million; and First Tennessee Bank will pay $16 million, according to the statement. Representatives of the banks couldn’t be reached for comment or declined to comment today.
JPMorgan Chase & Co. (JPM:US) previously agreed to a $45 million settlement, according to the statement.
The case is U.S. ex rel. v. Wells Fargo Bank, 06-00547, U.S. District Court, Northern District of Georgia (Atlanta).
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