Justice Department, Wells Fargo reach $175 million settlement on fair lending

The Department of Justice has reached a settlement with Wells Fargo Bank concerning an alleged pattern of discrimination against qualified African-American and Hispanic borrowers for a five-year period beginning in 2004. The settlement provides $125 million in compensation for borrowers who were either led into taking out subprime mortgages or who paid higher fees than similarly-qualified white borrowers. The additional $50 million will provide direct payments for downpayment assistance of residents in eight U.S. metro areas. “The department’s action makes clear that we will hold financial institutions accountable, including some of the nation’s largest, for lending discrimination,” Deputy Attorney General James Cole said. “An applicant’s creditworthiness, and not the color of his skin, should determine what loans a borrower qualifies for.” The settlement, which was filed today, is still subject to court approval. — Alexander Britell