Wells Fargo Settles in Minority Lending Dispute
Wells Fargo has agreed to pay at least $175 million in a settlement over allegations that it discriminated against black and Hispanic borrowers, although the bank continues to deny such claims.
The Justice Department had accused the nation’s largest lender of charging 34,000 minority borrowers higher fees or steering them into risky subprime mortgages when the borrowers could have qualified for safer prime mortgages. In the settlement, Wells Fargo will provide cash to the borrowers identified in the allegations. Additionally, a portion will go toward downpayment assistance for borrowers in eight U.S. cities.
Wells Fargo denies that it discriminated against minority borrowers, and company officials say they are agreeing to the settlement only to avoid litigation with the Department of Justice.
According to Wells Fargo officials, the bank “not only denies that it discriminated unlawfully, but affirmatively asserts that it has treated all of its customers without regard to race or national origin.”
Wells Fargo officials say that the 34,000 borrowers who were identified by the Justice Department as receiving unfair treatment had all received their mortgages through brokers associated with the bank. Wells Fargo, in a statement, said it will no longer work with mortgage brokers, which currently bring in about 5 percent of Wells Fargo’s home loan business.
The $175 million settlement marks the second-highest fair-lending settlement in history by the Justice Department. Bank of America, in November, agreed to pay $335 million on allegations that its Countrywide unit discriminated against more than 210,000 black and Hispanic borrowers.