Many lenders desired for the robo-signing damages and the results of other sketchy foreclosure processes and procedures would end with the conclusion to mortgage negotiation talks. However, the agreement failed to protect these lenders from future litigation, which has opened up the flood gates as everyone from investors to government officials are filing lawsuits against major lenders.
Specifically, U.S. District Judge Susan Illston ruled that Wells Fargo would not be allowed to dismiss claims filed by shareholders stating that the directors failed to disclose information pertinent to government investigations. After having to shell out approximately $5.3 billion as their part of the negotiation agreement, this is the last thing that Wells Fargo wanted to hear.
Usually when situations like this arise the guilty party is unwilling to provide a statement; however, that is not the case with this claim. Wells Fargo has publically denounced these claims and is adamant that the directors demonstrated integrity and responded appropriately throughout the investigations. The spokesman, Ancel Martinez, even went as far to say that they “look forward to our day in court,” which is a rather bold statement to be made on behalf of one of the most questioned lenders over the last couple of years.
If legal proceedings continue and Wells Fargo comes out guilty of failing to disclose information to investors, the bank could be responsible for more than the current $5.3 billion, not to mention other possible litigations.
One thing is certain: Wells Fargo, like other major lenders that participated in the bank negotiation talks, are not protected from future litigation and will therefore continue to see claims brought against them into the foreseeable future. Nobody knows the exact outcome, but in the end these lenders will probably well exceed the current $25 billion settlement plan, especially if a few attorneys general have much to say about the situation.
The possibility of a protection from future litigation against these lenders caused several attorneys general to leave the negotiating table, stating that the monetary settlement would not be enough to make up for the damage that had been done to the residents of their respective states. Now, these attorneys general (as well as investors and other government officials) have the opportunity to pursue the matter further—and many undoubtedly will.
The case of Wells Fargo and its shareholders may actually prove to be a good representation of what to expect with other lender-related litigations. All eyes are on cases like this to see the final outcome of these “claims.”