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United States v. Wells Fargo
Lending Discrimination Case
On July 12, 2012, the United States filed a complaint and proposed consent order in United States v. Wells Fargo Bank, NA (D.D.C.). The complaint alleges that Wells Fargo engaged in a pattern or practice of discrimination against qualified African-American and Hispanic borrowers in its mortgage lending from 2004 through 2009. The complaint alleges that Wells Fargo discriminated by steering approximately 4,000 African-American and Hispanic wholesale borrowers, as well as additional retail borrowers, into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans. All the borrowers who were allegedly discriminated against were qualified for Wells Fargo mortgage loans according to Well Fargo's own underwriting criteria.
The United States also alleges that, between 2004 and 2009, Wells Fargo discriminated by charging approximately 30,000 African-American and Hispanic wholesale borrowers higher fees and rates than non-Hispanic white borrowers because of their race or national origin rather than the borrowers' credit worthiness or other objective criteria related to borrower risk.
The consent order 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 where the department identified large numbers of discrimination victims and which were hard hit by the housing crisis. Additionally, pursuant to the Consent Order, Wells Fargo conducted an internal review, pursuant to the parties' agreed-upon statistical methodology and process, to determine whether there were any African-American and Hispanic subprime retail borrowers who arguably might have qualified for prime loans. Pursuant to this review, Wells Fargo will provide $59.3 million to 3,990 African-American and Hispanic retail subprime borrowers. This brings the total monetary compensation obtained under the settlement to $234.3 million.
Current Status & Important Dates
The District Court for the District of Columbia entered the Consent Order on September 20, 2012.
On December 19, 2012, the United States filed a notice informing the court that Wells Fargo had completed its internal review and had identified 3,990 African-American and Hispanic retail subprime borrowers who may have qualified for prime loans. Under the notice, Wells Fargo will provide an average of $14,850 per borrower for a total of $59,251,500 in compensation to retail borrowers. This amount is in addition to the $125 million compensation to wholesale borrowers.
On April 25, 2013, Independent Settlement Administrator Epiq Class Action & Claims Solutions, Inc. began mailing letters to borrowers whom the United States has identified as entitled to payments from the Wells Fargo lending discrimination settlement fund. The letters notify recipients that they have been identified as victims, list the minimum payments they can receive, and include response forms.
On November 25, 2013, the participation period ended for eligible victims to choose to participate in the settlement.
In early 2014, the Settlement Administrator mailed a letter with the exact payment amount and a release form to those who returned the participation form by the deadline. The Independent Settlement Administrator will mail checks on a rolling basis, upon receipt of a valid, signed release form.
Questions about this settlement?
For more information about this settlement, please visit http://www.wellsfargodojconsentorder.com, call 1-866-329-5282, or send an email to info@WellsFargoDOJConsentOrder.com.