Following two years in which its big- bank peers paid almost $2 billion to resolve fraud accusations by the Federal Housing Administration, Wells Fargo & Co. has decided it isn't giving up so easily.

Wells Fargo was one of five banks that agreed in 2012 to a nationwide, $25 billion settlement with the Justice Department over mortgage wrongdoing that included botched foreclosures. The FHA then took additional action against four of the banks, including Wells Fargo, for related housing-crisis wrongdoing. Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. decided to settle those matters. San Francisco-based Wells Fargo, which argued the nationwide settlement should have blocked the new FHA claims against it, chose to fight.

Today, the most profitable bank in the U.S. last year is set to tell a federal appeals court in Washington that the FHA lawsuit was a "brazen attempt" to impose "massive fraud liability" only six months after it paid $5 billion as part of the national accord, according to court papers.

"You go back to their DNA. They fight things. They always go down swinging," said Paul Miller, a banking analyst at FBR Capital Markets Corp. in Arlington, Virginia. He said the size of a potential settlement is likely to be "a rounding error" for the bank. Ancel Martinez, a spokesman for Wells Fargo, declined to comment on the case.

In the FHA lawsuit, filed in Manhattan federal court, the agency, which insures loans to help lower income individuals buy homes, alleged that it paid hundreds of millions of dollars on defaulted mortgages because Wells Fargo didn't properly vet the origination of individual loans.

Washington Ruling

Wells Fargo turned to the federal judge overseeing the nationwide settlement, asking her to block the FHA suit in New York. U.S. District Judge Rosemary Collyer in Washington refused, holding that while the language in the settlement protects banks against some FHA lawsuits, it doesn't cover the allegations made in the New York case.

Wells Fargo received immunity from lawsuits over allegedly false reports it made that it was complying with all FHA and Department of Housing and Urban Development rules, Collyer said. The immunity didn't extend to alleged violations of HUD or FHA rules on the vetting or origination of individual loans, Collyer wrote in her February 2013 ruling.

B of A Unit

Charlotte, North Carolina-based Bank of America and its Countrywide unit agreed to pay $1 billion in February 2012, while New York-based Citigroup resolved its FHA suit the same month by paying $158.3 million.

In February, New York-based JPMorgan agreed to pay $614 million to settle claims that it improperly approved FHA and Veterans Affairs loans.

If Wells Fargo, which had $21.9 billion in net income last year, does eventually negotiate an end to the FHA case, the size of the settlement may resemble the JPMorgan deal, Miller said.

There's relatively little risk in the strategy, said Peter Henning, a former lawyer with the Securities and Exchange Commission and a professor at Wayne State University Law School in Detroit.

"If you win, you save a lot of money," Henning said. "And if you lose, you do what you would have done anyway."

The case in Washington is U.S. v. Bank of America, 13-5112, U.S. Court of Appeals, District of Columbia (Washington).

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