Wells Fargo Pays $175M in Settlement
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WASHINGTON (KMOX) — Attorney General Lisa Madigan and the U.S. Department of Justice reached a $175 million joint settlement with Wells Fargo Thursday over discriminatory lending practices. The settlement resolves allegations that the lender and its brokers steered African-American and Latino borrowers into risky subprime loans more often than similarly situated white borrowers and charged minority borrowers more for their loans during the nation’s housing boom.
With this settlement, Madigan is the only state Attorney General to bring and resolve a fair lending lawsuit against a national bank.
“Wells Fargo’s discriminatory lending practices were illegal. They helped destroy a generation of wealth in African-American and Latino communities in the Chicago metro area,” Madigan said of the allegations in the state’s lawsuit. “Today’s settlement holds Wells Fargo accountable and requires the bank to invest in and help revitalize the same communities it helped to destroy.”
Today’s announcement concludes Madigan’s 2009 lawsuit that alleged illegal discrimination by based Wells Fargo in its lending practices against African-American and Latino homeowners. The settlement provides for at least $15 million in restitution to Illinois borrowers whose loans were originated between 2004 and 2009.
At least 3,300 Illinois borrowers are so far estimated to be victims of discrimination by Wells Fargo brokers, whether they were steered into subprime mortgages or charged higher fees than white borrowers. Illinois victims will receive at least $8 million in relief in cash payments. On average, steering victims are expected to receive a payment of $15,000, and pricing victims will receive an average $2,000 payment. However, actual damages will depend on individual circumstances, and consumers may receive more or less than the averages. Wells Fargo also agreed to identify additional victims who were discriminated against by its employees and will provide similar relief for those borrowers.
An additional $7 million will fund down payment assistance for Illinois borrowers in need.
In addition, the settlement provides for an independent administrator, who will contact identified borrowers and distribute compensation payments. Individuals who believe they were victims and have questions about eligibility also can email email@example.com for more information.