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Wells Fargo Owes $125M in Mortgage Suit

After a contentious suit, ""Wells Fargo"":https://www.wellsfargo.com/ agreed to settle with a group of pension funds and investors over allegations the mortgage giant dropped the ball on the risks involved with mortgage-backed securities, which plaintiffs called subpar and poorly written.

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""Wells Fargo"":https://www.wellsfargo.com/ settled in a California federal court on Wednesday, ending a nearly two-year exchange between several pension funds and the bank. The funds included those in Alameda County, Detroit, Guam, and New Orleans, among others.

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""The proposed settlement agreement is a negotiated resolution as to all named defendants and is intended to avoid the distraction and expense of litigation,"" Ancel Martinez, a spokesperson for ""Wells Fargo"":https://www.wellsfargo.com/, said in a telephone interview, according to ""_Bloomberg News_"":http://www.bloomberg.com/news/2011-07-07/wells-fargo-to-pay-125-million-to-settle-mortgage-backed-securities-case.html?cmpid=yhoo.

In their complaint, the plaintiffs alleged that ""Wells Fargo"":https://www.wellsfargo.com/ sold a set of 28 mortgage-backed securities in 2005 and 2006, misstating and neglecting important details related to the quality of the mortgages. ""Wells Fargo"":https://www.wellsfargo.com/ denied the allegations.

The troubled mortgage giant must still settle other lawsuits regarding mortgage-backed securities. Plaintiffs in the suits include investors from ""Charles Schwab Corp."":https://www.schwab.com/public/schwab/home/welcomep.html, several Federal Home Loan Banks, and others, all of which want billions of dollars in settlements, according to ""Dow Jones Newswire"":http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107081006dowjonesdjonline000356&title=update-wells-fargo-settles-mortgage-backed-security-suit-for-125-million.

Courts still need to sign off on the settlements, with a final ruling required sometime in the fall. The suit follows a ""Bank of America Corp."":https://www.bankofamerica.com/ agreement to settle $8.5 billion in investor claims over bond sales guaranteed by home loans packaged by Countrywide Financial Corp., according to ""_Bloomberg News_"":http://www.bloomberg.com/news/2011-07-07/wells-fargo-to-pay-125-million-to-settle-mortgage-backed-securities-case.html?cmpid=yhoo.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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