[Vision2020] Where Not To Bank Locally

[Art Deco]

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   Justice Dept: Wells Fargo to pay $175M to settle allegations of bias
against blacks, Hispanics By Associated Press, Updated: Thursday, July 12,
10:11 AM

WASHINGTON — Wells Fargo Bank will pay at least $175 million to settle
accusations that it discriminated against African-American and Hispanic
borrowers in violation of fair-lending laws, the Justice Department
announced Thursday.

Wells Fargo, the nation’s largest residential home mortgage originator,
allegedly engaged in a pattern or practice of discrimination against
qualified African-American and Hispanic borrowers from 2004 through 2009.

At a news conference, Deputy Attorney General James Cole said the bank’s
discriminatory lending practices resulted in more than 34,000
African-American and Hispanic borrowers in 36 states and the District of
Columbia paying higher rates for loans solely because of the color of their
skin.

Cole said that with the settlement, the second largest of its kind in
history, the government will ensure that borrowers hit hard by the housing
crisis will have an opportunity to access homeownership.

The bank will pay $125 million in compensation for borrowers who were
steered into subprime mortgages or who paid higher fees and rates than
white borrowers because of their race or national origin rather than
because of differences in credit-worthiness.

Wells Fargo also will pay $50 million in direct down payment assistance to
borrowers in areas of the country where the Justice Department identified
large number of discrimination victims. Those areas are Washington, D.C.,
Chicago, Philadelphia, Oakland and San Francisco, New York City, Cleveland,
Riverside, Calif., and Baltimore.

“The department’s action makes clear that we will hold financial
institutions accountable, including some of the nation’s largest, for
lending discrimination,” Cole said.

The settlement will bring “swift and meaningful relief” to African-American
and Hispanic borrowers who received subprime loans when they should have
received prime loans or who paid more for their loans, said Thomas Perez,
assistant attorney general for the Justice Department’s civil rights
division.

Perez said that because of the bank’s practices “an African-American
wholesale customer in the Chicago area in 2007 seeking a $300,000 loan paid
on average $2,937 more in fees than a similarly qualified white applicant.
And these fees were not based on any objective factors relating to credit
risk. These fees amounted to a racial surtax. A Latino borrower in the
Miami area in 2007 seeking a $300,000 paid on average $2,538 more than a
similarly qualified white applicant. The racial surtax for African
Americans in Miami in 2007 was $3,657.”

Wells Fargo noted in a statement that it has denied the claims.

“Wells Fargo is settling this matter solely for the purpose of avoiding
contested litigation with the DOJ,” it said, “and to instead devote its
resources to continuing to provide fair credit services and choices to
eligible customers and important and meaningful assistance to borrowers in
distressed U.S. real estate markets.”

The part of the settlement for $125 million deals with mortgages that were
priced and sold by independent mortgage brokers through Wells Fargo’s
wholesale channel. The financial institution said that it is discontinuing
financing mortgages that are originated, priced and sold by independent
mortgage brokers through the mortgage wholesale channel.

“Through our separate decision to no longer fund mortgages through
independent mortgage brokers, we can control how that commitment” to
serving home ownership needs “is met on every mortgage that Wells Fargo
makes,” said Mike Heid, president of Wells Fargo Home Mortgage.


-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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