The United States Department of Justice has announced that Wells Fargo has entered into a $175 million settlement agreement as a result of allegations that it discriminated against black and Hispanic mortgage applicants. The allegations state that the two ethnic groups received subprime loans, while giving white mortgage borrowers lower rates, even though they were no more qualified. Of that $175 million, $125 million will go to borrowers and the remaining $50 million will be in the form of down-payment assistance in locations where discrimination was prominent. The hardest hit areas identified include Washington, D.C., Chicago, Philadelphia, New York City, Cleveland, Baltimore, and three cities in California: Riverside, Oakland and San Francisco.
The alleged discrimination occurred between 2004 and 2009 and impacted more than 34,000 African American and Hispanic mortgage holders in 34 states, as well as the District of Columbia. In many cases, African American and Hispanic homeowners paid higher interest rates than whites, for no reason other than their race. In other cases, they were charged exorbitant fees, which Thomas Perez, Assistant Attorney General for the Justice Department, labeled a "racial surtax."
While Wells Fargo has agreed to the settlement, they deny the allegations behind the investigation. In an official statement, the nation's largest mortgage lender stated: "Wells Fargo is settling this matter 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 customers and important and meaningful assistance to borrowers in distressed U.S. real estate markets."
In addition, Wells Fargo stated it will no longer finance mortgages that are priced and sold by independent brokers. The $125 million payment Wells Fargo has agreed to pay is to borrowers whose mortgages were priced and sold by independent mortgage brokers.
Anna Cuevas, ex-bank executive turned homeowner advocate known as "America's Loan Modification Guru," has empowered and guided thousands of Americans in keeping their homes from foreclosure through loan modification self-advocacy. A popular blogger (askaloanmodguru.com), Cuevas has been called a "superhero of the loan modification industry" and has been nominated for CNN's Heroes. She is the #1 bestselling author of SAVE YOUR HOME Without Losing Your Mind or Money.
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