Wells Fargo to Settle Racism Allegations with $175 Million

Wells-FargoAccording to a Chicago Tribune article, the nation’s largest residential mortgage initiator, Wells Fargo, has been accused of unfairly discriminating against minority borrowers.  These allegations state that Wells Fargo violated fair-lending laws when dealing with eligible African American and Hispanic borrowers from 2004 to 2009.  This date range was during the housing boom and affected over 34,000 minority borrowers in Illinois and 35 other states.

Deputy Attorney General James Cole said that these borrowers received higher rates solely based on the color of their skin.  This has lead Wells Fargo bank to pay out a minimum of $175 million to settle these disputes.  $125 million of that amount will be paid as compensation to borrowers who were navigated to sub-prime mortgages or paid higher costs due to racial or ethnic reasons rather than credit concerns.  Wells Fargo will also pay around $50 million to assist borrowers that the Justice Department has identified as victims of this scandal.  The areas were found to be in Washington, D.C., Chicago, Philadelphia, Oakland, New York City, Baltimore and others.

Thomas Perez, assistant attorney general for the Justice Department’s civil rights division gave substantial evidence of the banks practices.  He stated that “an African-American wholesale customer in the Chicago area in 2007 seeking a $300,000 loan paid on average $2937 more in fees than a similarly qualified white applicant. And these fees were not based on any objective factors relating to credit risk. These fees amounted to a racial surtax. A Latino borrower in the Miami area in 2007 seeking a $300,000 paid on average $2,538 more than a similarly qualified white applicant. The racial surtax for African Americans in Miami in 2007 was $3,657.”  Although Wells Fargo has agreed to pay back the people affected, they are not admitting to guilt and the settlement needs to be approved by the court.

Any contract dispute such as this one concerning mortgages can be costly and time consuming.  Breach of contract disputes often arise when one side of the agreement is not pleased with the outcomes.  If your business is experiencing a similar problem then do not hesitate to contact a competent business law attorney in Illinois.  They will be able to guide you and give you sound advice to resolve your disputes as quickly as possible.