SPRINGFIELD, Ill. (CN) – Wells Fargo Bank will pay $175 million in a joint settlement with the U.S. Department of Justice and Illinois for discriminatory lending.
Looking for more securities news? Click here to check out Courthouse News’ Securities Law Review.
Attorney General Lisa Madigan sued Wells Fargo in 2009.
Madigan claimed Wells Fargo 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 country’s housing boom.
“Wells Fargo’s discriminatory lending practices were illegal,” Madigan said in a statement. “They helped destroy a generation of wealth in African-American and Latino communities in the Chicago metro area. Today’s settlement holds Wells Fargo accountable and requires the bank to invest in and help revitalize the same communities it helped to destroy.”
The settlement provides at least $15 million in restitution to Illinois borrowers whose loans originated between 2004 and 2009 and another $7 million for down payment assistance for Illinois borrowers in need.
Madigan said at least 3,300 Illinois borrowers were discriminated against by Wells Fargo brokers – either by being steered to a subprime mortgage or by being charged more for their loan.
On average, steering victims are expected to receive $15,000, and pricing victims will receive an average of $2,000, but actual damages will depend on individual circumstances.
Wells Fargo agreed to identify additional victims who were discriminated and to provide similar relief for those borrowers.