California Among States Getting Millions for Alleged Wells Fargo Bias

Friday, July 13, 2012

Assistant Attorney General Thomas E. Perez called it “a simple story” of discrimination.

And now that it has been told, Wells Fargo has agreed to pay $175 million to settle a complaint by the U.S. Department of Justice that the bank ripped off African Americans and Latinos by steering them into more expensive subprime mortgages at the height of the housing boom. The settlement awaits final approval by a federal judge.

Residents in Riverside, Oakland and San Francisco—among the nine cities identified as being as being having the largest number of discrimination victims—will receive $50 million in direct down payment assistance. Another $125 million will be distributed nationwide to victims of the scheme to extract higher fees and rates from minorities via the loans.

The settlement is the second-largest fair-lending agreement in Justice Department history, eclipsed only by the $335 million deal reached with Bank of America last year over California-based Countrywide practices. BofA acquired Countrywide in 2008.

Deputy Attorney General James M. Cole characterized Wells Fargo behavior between 2004 and 2009 as “systemic discrimination.” Cole said 34,000 African Americans and Hispanics ended up paying higher loan rates simply because of the color of their skin, including 4,000 who ended up pushed into subprime loans. The violations took place in 82 geographic markets across 36 states and the District of Columbia.

Wells Fargo, which has its headquarters in San Francisco and originates one-third of all U.S. mortgages, denies the claims of discrimination but says it is settling to avoid costly litigation.

–Ken Broder


To Learn More:

Wells Fargo to Pay $175M in Lending Settlement (by Pete Yost, Associated Press)

Wells Fargo to Pay $175 Million to Settle Lending Bias Case (by E. Scott Reckard, Los Angeles Times)

Wells Fargo Will Settle Mortgage Bias Charges (by Charlie Savage, New York Times)

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