UPDATE 1-US files civil mortgage fraud lawsuit against Wells

* Complaint brought by U.S. Attorney in Manhattan

* Alleges misconduct related to gov't-insured home loans

* Wells Fargo, the No. 4 U.S. bank, denies allegations

(Adds details about damages, past cases and comment from U.S.Attorney)

By Rick Rothacker and Aruna Viswanatha

Oct 9 (Reuters) - The U.S. government filed a civil mortgagefraud lawsuit on Tuesday against Wells Fargo & Co , thelatest legal volley against big banks for their lending duringthe housing boom.

The complaint, brought by the U.S. Attorney in Manhattan,seeks damages and civil penalties from Wells Fargo for more than10 years of alleged misconduct related to government-insuredFederal Housing Administration loans.

The lawsuit alleges the FHA paid hundreds of millions ofdollars on insurance claims on thousands of defaulted mortgagesas a result of false certifications by Wells Fargo, thefourth-biggest U.S. bank as measured in assets.

"As the complaint alleges, yet another major bank hasengaged in a longstanding and reckless trifecta of deficienttraining, deficient underwriting and deficient disclosure, allwhile relying on the convenient backstop of governmentinsurance," said Manhattan U.S. Attorney Preet Bharara.

The bank denied the allegations and said in a statement itbelieves it acted in good faith and in compliance with FHA andU.S. Department of Housing and Urban Development rules. It saidit has previously disclosed the investigation and willvigorously defend itself.

Bharara's office has brought similar cases in the past year,including one against Citigroup Inc unit CitiMortgage Inc,which settled the case for $158.3 million in February, andagainst Deutsche Bank , which paid $202.3 million inMay to resolve its case.

The U.S. Attorney's office in Brooklyn brought the biggestsuch case, against Bank of America Corp's Countrywideunit, which agreed in February to pay $1 billion to resolve theallegations.

The Wells Fargo case is brought under the False Claims Act,which gives whistleblowers incentives to report fraud againstthe government, and under FIRREA, a little-used statute that hasgrown in popularity in the past year.

(Reporting by Rick Rothacker in Charlotte, N.C. and ArunaViswanatha in Washington; editing by Matthew Lewis)

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