Wells Fargo pays $175M in discrimination settlement

Wells Fargo Bank will pay at least $175 million to settle accusations that it discriminated against black and Hispanic borrowers in violation of fair-lending laws, the Justice Department announced today. Wells Fargo, the nation’s largest residential home mortgage originator, allegedly engaged in a pattern or practice of discrimination against qualified minority borrowers from 2004 through 2009. U.S. Deputy Attorney General James Cole says the bank’s discriminatory lending practices resulted in more than 34,000 black and Hispanic borrowers in 36 states and the District of Columbia paying higher rates for loans solely because of judgments based on the color of their skin. With the settlement—the second-largest of its kind in history—the government will ensure that borrowers hit hard by the housing crisis will have an opportunity to access homeownership, Cole says. Wells Fargo noted in a statement that it has denied the claims. The bank has agreed to pay $125 million in compensation for borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin, rather than because of differences in credit-worthiness. Wells Fargo also will pay $50 million in direct down payment assistance to borrowers in areas of the country where the Justice Department identified large number of discrimination victims. Those areas include Washington, D.C., Chicago, Philadelphia, Oakland and San Francisco, New York City, Cleveland and Baltimore.