More Regional Banks to Face Probes of Shoddy FHA Loans

Banks are still haunted by bad underwriting of mortgage loans from the last housing boom, and the nightmare could endure for months to come.

M&T Bank’s disclosure Thursday that it is in settlement talks with the Justice Department for not complying with underwriting guidelines on Federal Housing Administration loans has renewed fears that more lenders will be the targets of probes and possible litigation.

The $97 billion-asset bank M&T, in Buffalo, N.Y., joins a growing list of large and regional banks currently in litigation or settlement discussions with the government for allegations of shoddy underwriting.

Wells Fargo, Quicken Loans, PNC Financial Services Group, Regions Financial and BB&T all have outstanding investigations of FHA loans, according to company filings.

Read on.

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