Wells Fargo Refuses to Settle Bad Mortgage Claims

By Robert Davis
Jan 20 2011

Wells Fargo, the second largest provider of mortgage loans in the US, announced this morning that they will not settle financially with Freddie Mac and Fannie Mae over faulty mortgages.

Last month it was reported that Bank of America would buy back millions in mortgage loans from the clearing houses that were based on faulty information. Freddie and Fannie were asking for the same thing from Wells Fargo, an attempt to clear the books for the struggling government controlled banks.

However, Wells Fargo said that they would not be settling with the two banks as Bank of America did and plan to fight through their legal options. But the industry experts have said that Wells Fargo does not have a leg to stand on when it comes time for court. As the original provider of the mortgage they were solely responsible for checking the validity of the information that was provided.

Freddie and Fannie launched a massive investigation into the mortgages that were purchased from several of the large providers. They found that more than 50% of the mortgages that had fallen into default were based on untrue or inaccurate information on the loan applications.

Government advisors have said that this is one of the main reasons for the collapse of the housing market in 2008 and the downfall of hundreds of banks across the US. Freddie and Fannie said in a statement today that they would pursue legal action against Wells Fargo.