Wells Fargo to pay $175 million in discrimination settlement

Wells Fargo has agreed to pay at least $175 million in
a settlement over allegations that it discriminated
against black and Hispanic borrowers, although the bank
continues to deny such claims.

The Justice Department had accused the nation’s largest
lender of charging 34,000 minority borrowers higher fees
or steering them into risky subprime mortgages when the
borrowers could have qualified for safer prime mortgages.
In the settlement, Wells Fargo will provide cash to the
borrowers identified in the allegations. Additionally, a
portion will go toward downpayment assistance for
borrowers in eight U.S. cities.

Wells Fargo denies that it discriminated against
minority borrowers, and company officials say they are
agreeing to the settlement only to avoid litigation with
the Department of Justice.

According to Wells Fargo officials, the bank “not only
denies that it discriminated unlawfully, but affirmatively
asserts that it has treated all of its customers without
regard to race or national origin.”

Wells Fargo officials say that the 34,000 borrowers who
were identified by the Justice Department as receiving
unfair treatment had all received their mortgages through
brokers associated with the bank. Wells Fargo, in a
statement, said it will no longer work with mortgage
brokers, which currently bring in about 5 percent of Wells
Fargo’s home loan business.

The $175 million settlement marks the second-highest
fair-lending settlement in history by the Justice
Department. Bank of America, in November, agreed to pay
$335 million on allegations that its Countrywide unit
discriminated against more than 210,000 black and Hispanic
borrowers.