Wells Fargo to Pay $175M for Targeting Minorities for Risky Mortgages
What's the top factor that determines how much interest you pay on your mortgage?
For most people, the answer would be your credit score. However, for some minority borrowers of Wells Fargo, the answer may have been the color of their skin.
Wells Fargo just settled a massive lawsuit for $175 million. The Department of Justice accused them of discriminatory lending practices. Wells Fargo said it was innocent, but opted not to fight the case.
The DOJ took a look at more than 34,000 loans that Wells Fargo made to borrowers nationwide. The government investigation found that loans submitted to Wells Fargo by mortgage brokers had varied interest rates, fees, and costs based only on race, reports Reuters. In its lawsuit, a Deputy Attorney General stated that the applicant's creditworthiness, and not the color of his or her skin, should determine how much it costs for borrowers to borrow money.
For its part, Wells Fargo denies that it did anything wrong. However, it agreed to settle the case for $175 million so that it could "devote its resources to continuing to provide fair credit services and choices to eligible consumers," reports Reuters. That's a pretty large price to pay if you truly believe you are innocent.
Discriminatory lending practices have been a hot topic in the Obama administration. Last year, Bank of America settled similar charges for $335 million.
If you are shopping around for a home mortgage, you should know that only non-discriminatory factors like your credit score should be considered. If you believe that you are given higher rates, or smaller loans, based on the color of your skin, you may want to talk to an attorney.
Related Resources:
- Wells Fargo to Settle Mortgage Discrimination Charges (The New York Times)
- Wells Fargo Settles Fair Lending Cases (The Wall Street Journal)
- Mortgage Servicers (FindLaw)
- Feds, Lenders Make $25 Billion Mortgage Settlement Official (FindLaw's Decided)
