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WASHINGTON, D.C. - (Mealeys) In what
the U.S. Department of Justice is calling the second largest fair lending
settlement in the department's history, Wells Fargo Bank NA today agreed to pay
more than $175 million to settle claims in a District of Columbia federal court
that it discriminated against African-American and Hispanic borrowers by
steering them into subprime mortgage loans, even though they were qualified
borrowers (United States of America v. Wells Fargo Bank, NA, No.
12-1150, D. D.C.).
(Motion for entry of consent order available. Document #88-120723-040B. Proposed consent order available. Document #88-120723-039R.)
According to a motion for
entry of consent order and proposed consent order filed by the Justice
Department in the U.S. District Court for the District of Columbia, Wells Fargo will pay
$125 million in compensation "for wholesale borrowers who were steered into
subprime mortgages or who paid higher fees than white borrowers because of
their race or national origin."
Wells Fargo also will pay $50
million "in direct down payment assistance 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," has agreed to undergo
an internal review of its retail mortgage lending and will compensate,
with monies in addition to the $125 million in compensation, all
African-American and Hispanic borrowers who were put into subprime loans while
similarly qualified white borrowers were placed into prime loans.
The settlement is subject to
In its complaint, the Justice
Department alleges that between 2004 and 2008, Wells Fargo discriminatorily
steered more than 4,000 African-American and Hispanic wholesale and retail
borrowers into subprime mortgages while white borrowers "with similar credit
profiles" received prime loans, in violation of the Fair Housing Act and the
Equal Credit Opportunity Act.
In addition, the Justice
Department claims that from 2004 to 2009, Wells Fargo also discriminated
against African-American and Hispanic wholesale borrowers by charging higher
fees and rates than it charged for white borrowers "because of their race or
national origin rather than the borrowers' credit worthiness or other objective
criteria related to borrower risk."
The Justice Department is
represented by Attorney General Eric H. Holder Jr., Thomas E. Perez, Steven H.
Rosenbaum, Jon M. Seward, Elizabeth Parr Hecker, Holly C. Lincoln and Coty R.
Montag of the Department of Justice, U.S. Attorney for the District of Columbia
Ronald C. Machen Jr. and Daniel F. Van Horn and Javier M. Guzman of the Office
of the U.S. Attorney for the District of Columbia. All are in Washington.
Wells Fargo is represented by
John Longstreth of K&L Gates in Washington.
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