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Wells Fargo Loses Bid to Dismiss FHA Lawsuit

gavel-twoA federal appeals court has rejected an attempt by Wells Fargo to block a government suit alleging the bank falsely certified the underwriting credit of loans it originated as a direct endorsement lender for the Federal Housing Administration (FHA).

In its attempt to have the suit dismissed, Wells Fargo argued the agreement outlined in 2012's National Mortgage Settlement barred the types of claims the government is now making. Wells Fargo was one of five banks participating in the $25 billion settlement with 49 state attorneys general.

A three-judge panel disagreed with the bank's argument, reasoning that the government's suit falls under a different category than the servicing and foreclosure practices covered by the settlement.

The latest ruling upholds an earlier decision made by U.S. District Judge Rosemary Collyer last year.

A representative for Wells Fargo did not immediately respond to a request for comment.

Out of the five banks involved in the National Mortgage Settlement, FHA went on to pursue four, alleging losses in the hundreds of millions of dollars on insured loans due to faulty quality assurance procedures. Bank of America, Citigroup, and JPMorgan Chase went on to settle their cases, leaving only the nation's biggest lender still left.

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