What can you say? Wells Fargo is simply another bad, bad American bank. Drop ’em people.
From the Washington Post: “In one of the largest fair-lending payouts in history, Wells Fargo agreed on Thursday to spend at least $175 million to settle federal accusations that it steered black and Latino borrowers into high-cost loans and charged them excessive fees.
The settlement with the nation’s largest home mortgage lender is rooted in a lawsuit filed four years ago by Baltimore over fair-lending violations. It culminated Thursday in what federal officials called “systemic discrimination” spanning 36 states and involving more than 34,000 minority customers over five years.
“This is a case about real people — African American and Latino — who suffered real harm as a result of Wells Fargo’s discriminatory lending practices,” said Thomas E. Perez, assistant attorney general for civil rights.
The Justice Department identified about 4,500 black and Hispanic Wells Fargo homeowners in the Washington and Baltimore regions who were targeted for unfavorable loans or charged what Perez dubbed a “racial surtax.” As part of the settlement, Wells Fargo is directing $50 million to the Washington region, Baltimore and six other metropolitan areas to help residents afford down payments for new homes.
However, the bank has denied any wrongdoing. In the settlement, Wells Fargo said it treated all of its customers fairly but that it wanted to avoid protracted litigation and provide “important and meaningful” assistance to borrowers. The payout represents 4 percent of the bank’s $4.2 billion profit during the most recent quarter.
“Our commitment to our customers and to turning the housing market around is stronger than ever,” Mike Heid, president of Wells Fargo Home Mortgage, said in astatement Thursday.
The settlement carried particular significance in Baltimore. The city was among the first to accuse the bank of discriminatory lending, spawning similar lawsuits across the country. The case prompted Justice and the Office of the Comptroller of the Currency to launch their own investigations, which they later combined into the complaint that was settled Thursday.
In a separate move, Baltimore withdrew its lawsuit Thursday after Wells Fargo agreed to provide an additional $3 million in homeowner assistance to residents. It also committed to making $125 million in prime loans to low- and moderate-income borrowers in the city over the next five years.
“This in a way brings to a close a certain chapter,” said John Relman, who led the city’s case against the bank. “This is the way you start to make things better on the ground.”
Justice’s investigation centered on Wells Fargo mortgages made between 2004 and 2009 by independent brokers. It found that highly qualified black borrowers were four times as likely to receive a subprime loan as similarly qualified white applicants. Hispanic borrowers were three times as likely to get a subprime loan. Those mortgages carried higher interest rates and unfavorable terms that often resulted in borrowers falling behind on payments or losing their homes altogether… ”