Wells Fargo settles for $175 million in lending discrimination case
One of the nations’s largest mortgage lending companies has settled charges in a racial discrimination case.
Wells Fargo will pay $175 million to settle accusations that the mortgage company violated fair-lending laws by allegedly steering black and Hispanic borrowers into subprime mortgages.This is the country’s second largest residential discrimination settlement to date.
The settlement will provide $125 million in compensation for borrowers who were allegedly steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race. The other $50 million will serve as down payment assistance to borrowers in U.S. communities where significant amounts of discrimination has taken place.
“An applicant’s creditworthiness, and not the color of his or her skin, should determine what loans a borrower qualifies for,” Deputy Attorney General James Cole said.Though they’ve settled, Wells Fargo denies the claims. The lender still agreed, however to compensate those the government believes were adversely impacted by mortgages priced and sold by independent mortgage brokers through its wholesale channel.
“Wells Fargo takes pride in serving the home ownership needs of all of our customers, and we are fully committed to fair and responsible lending,” Mike Heid, president of Wells Fargo Home Mortgage said in a statement.