U.S., Wells Fargo not as 'optimistic' about lawsuit settlement: lawyer

Tue Nov 18, 2014 5:16pm EST
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By Nate Raymond

NEW YORK (Reuters) - Wells Fargo & Co and the U.S. Department of Justice are "no longer as optimistic" about settling a lawsuit accusing the country's largest mortgage lender of fraud, a lawyer for the bank said on Tuesday.

Douglas Baruch, a lawyer for Wells Fargo, told a federal judge in Manhattan that while the parties would not rule out a settlement, both sides were prepared to resume litigating after putting the case on hold since July.

"The parties are no longer as optimistic as they once were," he said.

Two weeks ago, the San Francisco-based bank disclosed in a regulatory filing that it was in discussions to resolve the lawsuit, filed in 2012, which seeks hundreds of millions of dollars in damages.

The U.S. Justice Department says Wells Fargo failed to report more than 6,000 loans that did not meet requirements for insurance under the Federal Housing Administration and failed to properly review early payment defaults.

After the complaint was filed, Wells Fargo asked a federal judge in Washington, D.C. to excuse it from the Justice Department's claims. It was rebuffed in 2013, and its appeal also failed.

At Tuesday's hearing, U.S. District Judge Jesse Furman expressed dismay that Wells Fargo and the government did not ask his approval in July to formally put the case on hold to pursue settlement talks.

While the parties asked for another four months to prepare evidence and expert witnesses, he gave them only two, taking the case into August.   Continued...

The logo on a Wells Fargo bank building is seen in downtown San Diego, California March 18, 2014. REUTERS/Mike Blake