Wells Fargo fails to get government mortgage case dismissed
Court greenlights significant portions of the suit
Wells Fargo (WFC) wanted to rid itself of a toxic-mortgage case filed against the bank by the government, but a federal judge kept the suit alive this week.
U.S. District Judge Jesse Furman denied Wells Fargo’s motion to dismiss a series of statutory claims filed by the U.S. government back in October 2012.
The claims accuse Wells Fargo of misleading the U.S. Department of Housing and Urban Development into believing its loans qualified for insurance from HUD's Federal Housing Administration. The government seeks damages and civil penalties under the False Claims Act, which could lead to hundreds of millions of dollars in potential losses.
The judge did dismiss the government’s mistake of fact and unjust enrichment claims in their entirely. The court noted that claims filed before 2004 are untimely, while those made after 2004 are barred because HUD was aware of Wells Fargo’s misconduct at the time.
Additionally, Judge Furman in Manhattan noted that the U.S. Department of Justice is allowed to pursue all of its federal statutory claims against Wells Fargo.
The lawsuit between the government and Wells Fargo is one of many filed in the wake of the housing meltdown.