Wells Fargo & Co. has reached a settlement tied to bad real-estate loans that officials at Residential Capital LLC claim helped push the subprime mortgage lender into bankruptcy, said people familiar with the matter.
The bank reached the agreement with the trust overseeing ResCap’s liquidation, according to court documents and the people familiar. The settlement punctuates a forgettable 2016 for Wells Fargo, which has suffered through a scandal around its creation of bogus customer accounts and new regulatory sanctions over the rejection of its so-called living will.
Ally Financial will pay $52 million to settle allegations that one of its subsidiaries,Residential Capital (also called ResCap), knowingly marketed mortgage bonds despite the fact that the underlying mortgages were toxic, the U.S. Attorney’s Office announced Monday.
The settlement stems from 10 subprime residential mortgage-backed securities issued in 2006 and 2007.
ResCap sues 12 lenders, alleging bad loans bankrupted company
It appears that Residential Capital has decided not take its bankruptcy lying down. The company, which was once one of the largest mortgage servicers in the country, has filed lawsuits against 12 lenders that originated “poor quality” loans that ResCap purchased and securitized.
On Tuesday, the company filed lawsuits against the following in U.S. Bankruptcy Court in New York:
- Bank of America
- Summit Financial
- Synovus Mortgage Corp.
- Primary Capital Advisors
- Cadence Bank
- Mortgage Investors Group
- Honor Bank
- First Mariner Bank
- CMG Mortgage
- Citizens First Wholesale Mortgage
- RBC Mortgage Company
- PHH Mortgage Corp.
ResCap Sues BofA, RBC Mortgage Over ‘Defective’ Loan Sales
Residential Capital LLC, the defunct mortgage company, sued Bank of America NA, RBC Mortgage Co. and other lenders, claiming they sold it poor-quality loans that led to its bankruptcy.
ResCap filed for bankruptcy protection in May 2012 after investors who bought mortgage-backed bonds claimed they were loaded with faulty loans. It was liquidated to resolve more than $100 billion in potential lawsuits.
In lawsuits filed yesterday in U.S. Bankruptcy Court in Manhattan, ResCap said it’s seeking to recover “billions of dollars in liabilities and losses” over the “defective” loans. It wants the banks held responsible for more than 24 lawsuits alleging ResCap securitized bad loans, as well as for hundreds of claims, including securities fraud and breach of warranty, that it faced in bankruptcy.
ResCap, GMAC Agree To Pay $2M To End Wage Class Action
Law360, New York (April 14, 2014, 4:24 PM ET) — GMAC Mortgage LLC and bankrupt Residential Capital LLC have agreed to pay $2 million to settle a wage-and-hour class action alleging they stiffed workers on proper meal and rest breaks in violation of the Fair Labor Standards Act, according to documents filed in Washington federal court.
ResCap to Pay $230M to End Foreclosure Reviews
Residential Capital has won court permission to set aside $230 million for payments to homeowners whom the company may have foreclosed on improperly.
The former subprime mortgage unit of Ally Financial has received approval to enter into an agreement with the Federal Reserve Board that would end regulatory review of its foreclosure practices, Judge Martin Glenn of the U.S. Bankruptcy Court in Manhattan ruled on Wednesday.