Wells Fargo Mortgage Loan Scandal

Wells Fargo has had a few of the biggest scandals in recent history and has not handled them for the better interest of regaining trust in their customers. In 2016, Wells Fargo reached a settlement with the federal government, agreeing to pay out $1.8 billion for falsely underwriting thousands of home mortgage loans prior to 2008 that should have never been eligible for Federal Housing Administration insurance, the largest settlement in FHA history. This scandal comes prior to the fraudulent accounts in 2016 after settling with the federal government.

Wells Fargo’s official statement reads that the ruling “allows us to put the legal process behind us, and to focus our resources and energy on what we do best, serving the needs of the nation’s homeowners.” The statement wasn’t attributed to Stumpf or any of their senior executives. Instead, it came from Franklin Codel, president of Home Lending. This was a complete missed opportunity for Stumpf to directly apologize for the company’s part in the 2008 crash and firmly establish Wells Fargo as a trusted institution dedicated to the financial well-being of its customers. Instead, the bank appeared to brush the ruling off as a nuisance and waste of energy. The fact of the matter is that Wells Fargo is one of the institutions that emerged from the Great Recession a much stronger company.

The comment from the president of Home Lending was the time for him to apologize for the issues that contributed to the crash in 2008. Brushing the problems off really showed that they do not care or really take responsibility for their actions that put many Americans in financial turmoil that used Wells Fargo and did not use them. The money settlement alone was not seen as a big thing for them, rather they would continue doing fraudulent practices in 2016 and open up millions of fake accounts that were not authorized by their members and effectively lost their credibility from the public and still struggle to this day.

Comments

  1. SBartonArtFilmJuly 20, 2020 at 7:51 PM

    Great point, Matthew. Wells Fargo's role in the burst of the housing bubble due to lending to 'subprime' borrowers that never should (and didn't save for massive committed fraud not only at Wells but Citibank, Bank of America, Quicken Loans, Goldman Sachs, ETC! I worked as a mortgage fraud auditor during those years 2008-2012 and it was pretty standard practice of big and small banks a lot. Thanks for the reminder of how shady they've been for a very long time.

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