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By E. Scott Reckard
February 13, 2013, 1:27 p.m.

A government lawsuit accusing No. 1 home lender Wells Fargo & Co. of defrauding a federal mortgage-insurance program is shaping up as a knock-down battle between the San Francisco bank and the U.S. Justice Department.

Wells Fargo lost a round Monday, when U.S. District Judge Rosemary Collyer in Washington refused the bank’s request to dismiss the federal action. But the bank, which has vehemently denied wrongdoing, said Tuesday it might appeal Collyer’s ruling and would continue to press its counter-claims against the lawsuit in New York.

The False Claims Act lawsuit, seeking “hundreds of millions of dollars,” is one in a series of government attempts to recover losses related to the mortgage meltdown.

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