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Wells Fargo to pay $1.2 bn to settle US mortgage suit

AFP
Wells Fargo dipped 0.2 percent after reporting a 5.9 percent drop in net income to $5.5 billion

Wells Fargo will pay $1.2 billion to settle a US lawsuit that accused it of improperly certifying loans for a federal mortgage insurance program, the bank said Wednesday.

Wells Fargo said it had reached an agreement in principle with the US Department of Justice and other US agencies on allegations the bank improperly certified Federal Housing Administration loans from 2001-2010.

The agreement resolves an October 2012 US lawsuit against Wells Fargo that charged that the bank's improper certifications meant it should not have received federal insurance proceeds when loans defaulted.

Wells Fargo said it would reduce its 2015 earnings by $134 million, or three cents per share, to $22.9 billion.

Shares of Wells Fargo fell 3.2 percent to $46.91 in morning trade.