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Baltimore Settles Lawsuit Against Wells Fargo for Subprime Lending Practices in Minority NeighborhoodsSalem-News.com
Wells Fargo to Resolve Fair Lending Claims.
(BALTIMORE, MD.) - The city of Baltimore filed suit against Wells Fargo Bank in 2008; the new agreement sets aside funds for borrowers and potential homebuyers.
Today, Mayor Stephanie Rawlings-Blake was joined by Thomas Perez, assistant attorney general for the U.S. Department of Justice for the announcement of a major settlement of a fair lending case that started in Baltimore.
In 2008, Baltimore filed suit against Wells Fargo Bank because of the subprime lending practices targeted at minority neighborhoods in Baltimore.
Baltimore City is entering into a collaboration agreement with Wells Fargo Bank. Under the terms of the agreement, the City will dismiss the lawsuit filed in 2008. Wells Fargo will provide $4.5 million as part of a Lending Assistance Program for individuals who want to buy or renovate homes and live in the city.
Wells Fargo will also grant the City of Baltimore $3 million in additional funds for local priority housing and foreclosure-related initiatives.
The Lending Assistance Program in Baltimore will be run by an independent non-profit agency and overseen by officials in the Department of Justice.
The program will be launched in late 2012 or 2013 with a major community event featuring home buying information and education for people looking to buy a home in Baltimore.
Finally, Wells Fargo has agreed to commit to lending $425 million for home buying in Baltimore City in the next five years. This commitment includes $125 million in loans for low and moderate income residents.
“This collaborative agreement allows Baltimore to move forward and focus our efforts on growing the city,” said Mayor Rawlings-Blake.
“I want to thank Mr. Perez and the Department of Justice for their commitment to justice and improving the lives of people in our community.”
The mayor thanked lawyers from the Law Department as well as the City’s outside counsel, Relman, Dane & Colfax, a civil rights law firm based in Washington, D.C.
Earlier today, the Department of Justice filed a settlement to resolve allegations that Wells Fargo Bank, the largest residential home mortgage originator in the United States, engaged in a pattern or practice of discrimination against qualified African-American and Hispanic borrowers in its mortgage lending from 2004 through 2009.
The settlement provides $125 million in compensation for wholesale borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin.
Wells Fargo will also provide $50 million in direct down payment assistance to borrowers in communities around the country, including Baltimore, where the Department identified large numbers of discrimination victims and which were hard hit by the housing crisis.
Additionally, Wells Fargo has agreed to conduct an internal review of its retail mortgage lending and will compensate African-American and Hispanic retail borrowers who were placed into subprime loans when similarly qualified white retail borrowers received prime loans.
Compensation paid to any retail borrowers identified in the review process will be in addition to the $125 million to compensate wholesale borrowers who were victims of discrimination.
“By reaching a settlement in this case, African-American and Hispanic wholesale borrowers who received subprime loans when they should have received prime loans, or who paid more for their loans, will get swift and meaningful relief,” said Thomas E. Perez, assistant attorney general for the Civil Rights Division.
“As one of the largest mortgage lenders in the country, Wells Fargo’s commitment to conduct an internal review of its retail lending and compensate African American and Hispanic retail borrowers who may have been improperly placed in subprime loans is significant. We will continue to work aggressively to ensure that all qualified borrowers have access to credit on an equal basis.” Press release from the City of Baltimore's Mayor's Office
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