DOJ Weighs Fair Lending Charges Against Wells Fargo
The U.S. Department of Justice is investigating Wells Fargo, the largest mortgage servicer, over allegations that the bank may have discriminated against minority home buyers by offering them risky loans when they qualified for more traditional, safer loans.
Wells Fargo have called the charges unjustified and says the banks has complied with fair lending laws.
City officials in Baltimore and Memphis have filed lawsuits against Wells Fargo, accusing the bank of “‘reverse redlining’ or intentionally targeting minority communities for predatory mortgage loans, leading to high foreclosures in minority neighborhoods,” Reuters reports about the lawsuits.
Bank of America’s Countrywide Financial unit recently faced similar charges of discriminating against minority home buyers. Despite denying the claims, the bank still agreed to pay $335 million, a record, to settle the charges in December. The bank had been accused of issuing higher interest rates and fees and steering Hispanics and black borrowers to pricey subprime loans. On the other hand, investigators argued that white borrowers tended to be offered less risky loans than minority borrowers.
Wells Fargo also announced this week that it’s facing investigations by the government into over whether it violated other laws with its mortgage origination practices. For example, the bank may face charges over whether it properly disclosed risks to investors of its mortgage-backed securities from September 2006 through early 2008.