Wells Fargo & Co has agreed upon paying $175 million for resolving the allegations that it had charged the Hispanics and African-Americans higher rates and fees for mortgages even though they qualified for better deals during the period of housing boom, according to the US Justice of Department. This comes as a part of the latest efforts by Obama administration for trying to eliminate any kind of discriminatory practices. These had led to high rates of mortgage defaults in the poor neighborhoods when the housing bubble burst.
In the consent order with the government, Wells Fargo said that it was treating all its customers equally and there was no discrimination on basis of national origin or race. It also added that it was settling the matter just because it wanted to avoid any contested litigation with the US Justice Department. Wells Fargo is now funding every one out of 3 mortgages in the country.
In a government investigation, in as many as 34,000 cases, Wells Fargo was found to have charged the Hispanics and African Americans higher fees and rates for mortgages as compared with the white borrowers having similar credit profiles. This was reported in the documents that were filed in the District court of Columbia.
In around 4000 cases, minority borrowers were steered into subprime mortgages even though they were qualifying for the cheaper loans. According to the US assistant attorney general for civil rights, Thomas Perez, this was a case against real people, Latino and African-Americans, who had suffered real harm due to the lending practices of Wells Fargo.
He added that, people with similar qualifications must be treated similarly and they should be judged on the basis of their credit worthiness and not on basis of color or skin.
The 2nd largest mortgage lender, is now supposed to pay $125 million to the borrowers who were charged more than their counterparts from 2004-2009.