The Justice Department filed its second largest residential fair lending settlement today to resolve allegations that Wells Fargo Bank discriminated against African-American and Hispanic borrowers in its mortgage lending.
Wells Fargo, the largest home mortgage lender in the nation, has agreed to a $175 million settlement with the department, according to a department news release.
“If you were African-American or Latino, you were more likely to be placed in a subprime loan or pay more for your mortgage loan, even though you were qualified and deserved better treatment,” Assistant Attorney Genera for the Civil Rights Division Thomas Perez said in a statement. “This is a case about real people-African American and Latino- who suffered real harm as a result of Wells Fargo’s discriminatory lending practices.”
The lender steered minority borrowers into more expensive subprime mortgages or assigned to them higher fees and rates than white borrowers, the department said. Wells Fargo has agreed to pay $125 in compensation to minority borrowers and to provide $50 million to assist borrowers around the country in regions where the department found large numbers of discrimination victims.
The department’s investigation began in 2009 and received aid from the Office of the Comptroller of the Currency, which conducted a parallel investigation of Wells Fargo’s lending practices in the D.C. area in 2010. In the process of the investigation, the department reviewed internal documents and “non-public loan-level data on more than 2.7 million Wells Fargo loans originated between 2004 and 2009,” Perez said.
Wells Fargo has also agreed to conduct an internal review of its mortgage lending.
“The department’s action makes clear that we will hold financial institutions accountable, including some of the nation’s largest, for lending discrimination,” Deputy Attorney General James M. Cole said. “An applicant’s creditworthiness, and not the color of his or her skin, should determine what loans a borrower qualifies for.
In 2011, the department collected its largest fair lending settlement amounting to $355 million from Countrywide Financial Corporation.