Wells Fargo to Pay $175 Million for Racial Discrimination
The Justice Department announced on Thursday that Wells Fargo was guilty of racial discrimination in its mortgage and lending policies between 2004 and 2009. The investigation revealed that mortgage brokers charged more to minority borrowers than white borrowers with the same lending risk. Brokers were also guilty of lending riskier subprime mortgages to minorities since 2004, the New York Times reports.
The bank giant has agreed to pay out a $175 million settlement. A majority of that money will go towards recompensating borrowers while about $50 million will be used to improve communities and housing in various neigborhoods.
A number of metropolitan areas will benefit from the settlement, including Chicago, Baltimore, Los Angeles, Oakland and New York.
The most unsettling aspect of the entire investigation and settlement is that Wells Fargo has not admitted fault. Instead, a representative quoted by Reuters stated that the settlement was:
…solely for the purpose of avoiding contested litigation with the DOJ, and to instead devote its resources to continuing to provide fair credit services and choices to eligible consumers, and important and meaningful assistance to borrowers in distressed U.S. real estate markets.
The lending giant maintains an official innocence while brushing over the nitty-gritty issues with their faulty lending practices, which led to massive defaults and misery for thousands of homeowners in communities across the U.S. Officials claim that it is a waste of time to mull over the details of the legal investigation, which could slow down the continued loaning practices of the company.
Wells Fargo has already had to pay settlement fees in Memphis and Shelby County in Tennessee during the month of May. That settlement came out to about $7.5 million and the bank agreed to lend about $425 million to borrowers in the area over the next five years, Wall St. Cheat Sheet reports.
The Tennessee case was particularly pertinent because 43 percent of the foreclosures in the area were in black neigborhoods, another symptom of the corrupt and slanted lending policies of the monetary giant.
The original lawsuit against Wells Fargo began back in 2009 when the Office of the Comptroller of Currency noticed a lending pattern developing in the Baltimore area. Over the course of the investigation, the Department of Justice continued to widen the scope of the investigation to include metropolitan areas across the country, the New York Times reports.
The $175 million settlement still needs to be approved by a judge in the coming days, Reuters reports. The newsagency quotes Deputy Attorney General James Cole regarding this settlement and the discrimination of the lending bully stating:
An applicant’s creditworthiness, and not the color of his or her skin, should determine what borrowers pay and what loans they qualify for… Put simply, there is no place for discriminatory lending in the marketplace, and it will not be tolerated.
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