Settlement talks between Wells Fargo and the U.S. government over alleged mortgage insurance fraud have stalled, according to a media report.
According to a report from Bloomberg, lawyers for both sides told a judge on Tuesday they’re doubtful about the chances of reaching an agreement on a suit alleging the bank fraudulently submitted loans for insurance through the Federal Housing Administration (FHA).
The suit, brought against Wells Fargo in 2012, claims the megabank took advantage of its participation in an FHA insurance program to certify ineligible loans without needing approval from the agency. When those mortgages went under, the resulting defaults cost the program hundreds of millions of dollars, the government says.
Citing an unnamed source, Bloomberg reports attorneys for both the United States and Wells Fargo said a settlement seems out of reach at this point, even after months of settlement talks.
In a statement to Bloomberg, Wells Fargo spokesperson Tom Goyda said, “Our good-faith efforts to work with the federal government on a possible resolution of the complaint have not yet resulted in a settlement. We will move forward with presenting our case in support of our prudent and responsible FHA lending practices.”
A spokesperson for U.S. Attorney Preet Bharara, whose office is pursuing the case, declined to comment.