Race-based Lending Costs Wells Fargo $175 Million
Wells Fargo Bank has agreed to pay $175 million to settle allegations of discriminatory lending practices against African-American and Hispanic borrowers.
Between 2004 and 2009 Wells Fargo steered more than 4,000 wholesale mortgage borrowers into more expensive subprime loans because of their race or national origin, and charged at least another 30,000 higher fees and costs on their mortgages for the same reason according to a complaint filed in Federal court in Washington D.C. by the Department of Justice.
The complaint said well qualified African-Americans applicants for Wells Fargo residential mortgage loans were more than four times as likely to receive a subprime loan as a similarly qualified white applicant.
Hispanic borrowers were three times as likely as their white counterparts to receive a subprime loan, resulting in both African-American and Hispanic borrowers paying, on average, tens of thousands of dollars more for a Wells Fargo loan the complaint says.
“The Department’s action makes clear that we will hold financial institutions accountable, including some of the nation’s largest, for lending discrimination. 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 at press conference announcing the settlement agreement.