Banks could face billions in fines over foreclosures

In a filing with the Securities and Exchange Commission, Wells Fargo said the investigations are centered around whether the bank violated fair-lending laws and followed proper procedures with its foreclosure affidavits. 

“With regard to the investigations into foreclosure practices, it is likely that one or more of the government agencies will initiate some type of enforcement action against Wells Fargo, which may include civil money penalties,” the company said in its filing. “Wells Fargo continues to provide information requested by the various agencies.”

The bank also said there are seven class-action suits and several individual-borrower actions have been filed against it, which focus on problems with foreclosure paperwork, which could lead to losses as high as $1.2 billion. 

“Specifically, plaintiffs allege that Wells Fargo signers did not have personal knowledge of the facts alleged in the documents and did not verify the information in the documents ultimately filed with courts to foreclose,” Wells Fargo said in the filing.

Bank of America also said the investigations could lead to “significant legal costs,” according to its annual report to the SEC.