Wells Fargo discloses accidental foreclosures, tax credit probe

Regulators are looking at the bank's purchases of low-income housing credits, according to a filing

Aug 6, 2018 @ 8:54 am

By Bloomberg News

Wells Fargo & Co. disclosed another round of lapses and potential scandals in a quarterly report Friday, saying that it faces a U.S. inquiry into its purchase of low-income housing credits and conceding that it may have unnecessarily foreclosed on about 400 homeowners.

Government agencies are examining how Wells Fargo negotiated and purchased "certain federal low-income housing tax credits in connection with the financing of low-income housing developments," according to the filing. The bank didn't identify the agencies in the filing.

Separately, Wells Fargo said an internal review found it failed to grant about 625 customers modifications to mortgages even though they qualified for relief — and that it ultimately carried out foreclosures on 400. The bank said it erred when calculating attorney fees for changes between 2010 and 2015, deeming some applicants ineligible. It set aside $8 million to make customers whole.

The disclosures add to almost two years of revelations about probes, misconduct and other lapses that have taken a toll on the firm's reputation, business and relations with regulators, which in February imposed an unprecedented cap on the bank's growth. In some cases, Wells Fargo discovered problems itself as part of a broad review its businesses and efforts to overhaul internal controls.

The scandals began erupting in 2016, when regulators said the bank had opened millions of accounts without customers' permission, leading to a public outcry and spurring additional scrutiny. Incorrect fees in the firm's wealth-management unit, inconsistent pricing in the foreign-exchange business, and employees improperly altering documents in the wholesale unit are among other government inquiries at the bank.

In February, the Federal Reserve slapped Wells Fargo with a cap on its assets, in effect banning its further expansion until the bank cleans up its act to the regulator's satisfaction. CEO Tim Sloan has said the company is committed to making the changes necessary to enhance operational and compliance risk.

The bank said in Friday's filing that "reasonably possible" legal charges could be as high as $2.2 billion beyond reserves as of June 30. That's down from $2.6 billion in the previous quarter.

(More: Wells Fargo's latest issue emerges amid bank's rebranding campaign)


What do you think?

View comments

Recommended for you

Featured video


How interest rates have affected different types of insurance

Social media and engagement editor Scott Kleinberg and reporter Greg Iacurci discuss a common theme in this week's popular insurance stories.

Latest news & opinion

Private Ocean grows to $2.2 billion with acquisition of Mosaic Financial

Combined financial planning operation gives the firm an expanded footprint in the San Francisco area.

Joe Duran has a game plan, and anyone can play

The CEO of United Capital built a formula for holistic financial planning that any firm can tap into — for a price.

LPL video about private equity looks like a swipe at Cetera

Recruiting video warns about potential consequences for advisers when a PE firm buys a broker-dealer.

Ladenburg chairman Phillip Frost steps down

The SEC charged Frost with fraud earlier this month.

Envestnet Tamarac partners with Schwab, TD on digital account openings

Auto-filling documents designed to make onboarding more efficient for RIAs and more convenient for clients.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print