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Wells Fargo loses bid to avoid lawsuit over FHA mortgage loans

By Lawrence Hurley

WASHINGTON (Reuters) - A U.S. appeals court on Tuesday rejected Wells Fargo & Co's WFC.N attempt to avoid litigation over government allegations of misconduct related to home mortgage loans issued by the Federal Housing Administration.

A unanimous three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit said the bank's participation in a $25 billion settlement with the government over foreclosure abuses did not address the claims in the separate civil case brought by the U.S. Attorney’s office in Manhattan concerning the origination and underwriting of loans.

"We are disappointed with the appellate court’s ruling," Wells Fargo spokesman Ancel Martinez said in a statement. "We look forward to presenting our case in support of our longstanding record of responsible lending."

Wells Fargo had asked a federal district court in Washington, D.C., to enforce the 2012 settlement, which had been negotiated by the Justice Department. The bank said the claims made in the more recent New York lawsuit should be barred in light of the settlement. The appeals court on Tuesday upheld a district judge's decision to deny the bank's motion.

The appeals court, in Tuesday's unsigned opinion, said the settlement language clearly allowed the separate claims to be made.

The case is United States v. Wells Fargo, U.S. Court of Appeals for the District of Columbia Circuit, No. 13-5112.

(Additional reporting by Aruna Viswanatha; Editing by Howard Goller and Grant McCool)

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