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Wells Fargo Pays $125 Million for Latino Mortgage Discrimination

The U.S. Department of Justice has come down hard on Wells Fargo Bank, the largest residential home mortgage originator in the United States, for discriminating against Latino and African-American borrowers from 2004 to 2009.
According to a Department of Justice announcement, Wells Fargo will pay a $125 million settlement with an additional $50 million in down payment assistance to select borrowers. Individuals who believe that they may have been victims of lending discrimination by Wells Fargo and have questions about the settlement may email the department at wellsfargo.settlement@usdoj.gov .
Wells Fargo said in a statement, “While Wells Fargo denies the claims, the company has agreed to pay $125 million to borrowers that the DOJ believes were adversely impacted by mortgages priced and sold by independent mortgage brokers through its wholesale channel. continuing to provide fair credit services and choices to eligible consumers, and important and meaningful assistance to borrowers in distressed U.S. real estate markets.”
Additionally, Wells Fargo has agreed to conduct an internal review of its retail mortgage lending and will compensate African-American and Hispanic retail borrowers who were placed into subprime loans when similarly qualified white retail borrowers received prime loans.   Compensation paid to any retail borrowers identified in the review process will be in addition to the $125 million to compensate wholesale borrowers who were victims of discrimination.
Wholesale borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin will receive the $125 million. The $50 million in direct down payment assistance goes to borrowers in communities around the country where the department identified large numbers of discrimination victims and which were hard hit by the housing crisis.
This is the second largest fair lending settlement in the Justice Department’s history. The settlement, which is subject to court approval, was filed in the U.S. District Court for the District of Columbia in conjunction with the department’s complaint, which alleges that between 2004 and 2008, Wells Fargo discriminated by steering approximately 4,000 African-American and Latino wholesale borrowers, as well as additional retail borrowers, into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans.
All the borrowers who were allegedly discriminated against were qualified for Wells Fargo mortgage loans according to Well Fargo’s own underwriting criteria. The United States also alleges that, between 2004 and 2009, Wells Fargo discriminated by charging approximately 30,000 African-American and Hispanic wholesale borrowers higher fees and rates than non-Hispanic white borrowers because of their race or national origin rather than the borrowers’ credit worthiness or other objective criteria related to borrower risk.
 

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