U.S. Bancorp to Pay $200 Million to Resolve Mortgage Probe

Jun 30, 2014 1:07 pm ET

(Updates share price in last paragraph.)

June 30 (Bloomberg) -- U.S. Bancorp, the nation’s largest regional lender, agreed to pay $200 million to resolve federal claims that it misrepresented the quality of government-backed mortgages the company originated.

The agreement covers loans that Minneapolis-based U.S. Bancorp made from 2006 through 2011 that were backed by the Federal Housing Administration, the Justice Department said today in a statement.

“By misusing government programs designed to maintain and expand homeownership, U.S. Bank not only wasted taxpayer funds, but inflicted harm on homeowners and the housing market that lasts to this day,” Stuart F. Delery, assistant attorney general for the Justice Department’s civil division, said in the statement.

The Justice Department has been probing shoddy mortgages that helped fuel the financial crisis and caused losses for government agencies that backed the loans. SunTrust Banks Inc. agreed this month to pay $968 million to resolve federal and state probes that a unit misrepresented the quality of mortgages the bank originated and deceived homeowners on loans it serviced.

U.S. Bancorp previously disclosed potential claims tied to the probe and “cooperated fully with the DOJ,” the company said today in a separate statement.

Shares of the lender rose 2 cents to $43.38 at 1:03 p.m. in New York. The stock climbed 7.4 percent this year.