Government agencies are investigating Wells Fargo & Co.'s foreclosure practices, and the company says it will likely face penalties from how it handled many foreclosures.
The investigations center on whether the bank violated fair-lending laws and if it followed proper procedures with its foreclosure affidavits, according to filings with the Securities and Exchange Commission.
With regard to the investigations into foreclosure practices, it is likely that one or more of the government agencies will initiate some type of enforcement action against Wells Fargo, which may include civil money penalties, Wells Fargo said in its filing.
The bank also faces seven class-action lawsuits as well as several individual-borrower lawsuits, which mostly accuse Wells Fargo of submitting fraudulent affidavits or other documents to foreclose on homes.
Wells Fargo says it may face as much as $1.2 billion in losses from the lawsuits.
Source: “Wells Fargo Says Being Investigated, Could Face Penalties on Foreclosures,” Associated Press (Feb. 25, 2011)