Sarah Mirando  |  July 18, 2012

Category: Legal News

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Wells Fargo to Pay $125 Million Lending Discrimination Settlement

By Mike Holter

 

Wells FargoMortgage lender Wells Fargo & Co. has agreed to pay $125 million and set up a $50 million assistance fund to resolve allegations it discriminated against minority borrowers. This is the second Wells Fargo lending discrimination settlement reached in two years. The bank reached a $3.25 million class action lawsuit settlement in 2011 to resolve allegations it knowingly discriminated against borrowers in minority neighborhoods, resulting in those borrowers paying more for their loans than borrowers in non-minority areas of Los Angeles County.

The latest Wells Fargo lending discrimination settlement will resolve government accusations that the bank put creditworthy Hispanic and African-American borrowers into more expensive subprime loans from 2004 to 2007, and that mortgage brokers added charges through 2009 that caused minority borrowers to pay higher fees, costs and interest than similar white borrowers.

“Wells Fargo’s internal documents reveal that senior officials were aware of the numerous tactics that subprime originators employed to keep loans in the subprime division,” when they could have qualified for prime loans, the Justice Department alleged in the lending discrimination lawsuit.

Wells Fargo denies it engaged in illegal discrimination and said it agreed to the class action settlement to avoid the cost of ongoing litigation. The bank also agreed to stop using outside brokers to create mortgages and to provide $50 million in direct payments for down-payment assistant in eight U.S. regions where the Justice Department alleges Wells Fargo’s lending discrimination practices had the most impact.

The Wells Fargo lending discrimination settlement is part of the Obama administration’s effort to crack down on lending discrimination to reduce loan defaults during the housing bust. The Wells Fargo settlement is the second largest reached by the Justice Department. In December 2011, the DOJ reached a record $335 million settlement with Bank of America after it found the bank’s Countrywide unit assessed higher fees and interest rates on more than 200,000 black and Hispanic borrowers from 2004 through 2007.

 

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Updated July 18th, 2012

 

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22 thoughts onWells Fargo to Pay $125 Million Lending Discrimination Settlement

  1. Nancy Roberts says:

    I was forced out of my home of 20 years. There was no proper paperwork. I raised my children and all my newborn grandbabies were brought to my home. Grandmas house was the steady and secure home in their lives. I was very ill when Wells Fargo took it all away from me. Being locked out of my home was the most emotional experience in my life. I have a homestead that was not honored, and I have not been approached by Wells Fargo to honor the Homestead. I have been homeless because of the banks actions. I had major surgery and was forced to move from my home after being out of the hospital for 6 weeks. I have never really recuperated from the surgery and being put on the streets. With no money and a husband who disappeared. I have all my paperwork in order and would like for someone to contact me. It was the most cruel thing that could of happened to me. I worked hard and feel that I deserved better that what I got. It really was the saddest day of my life. Your kind attention would be most appreciated. Thank You

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