Last week Wells Fargo & Company announced a settlement agreement between Wells Fargo Bank, N.A. and the U.S. Department of Justice (DOJ) that resolves the DOJ’s previously disclosed claims that some Wells Fargo mortgages may have had a disparate impact on some African-American and Hispanic borrowers.
The DOJ claims are based on a statistical survey of Wells Fargo Home Mortgage loans between 2004 and 2009, and the claims primarily relate to mortgages priced and sold to consumers by independent mortgage brokers. While Wells Fargo denies the claims, the company has agreed to pay $125 million to borrowers that the DOJ believes were adversely impacted by mortgages priced and sold by independent mortgage brokers through its Wholesale channel.
This settlement also resolves pending litigation filed in 2009 by the State of Illinois on behalf of borrowers there, and resolves an investigative complaint filed in 2010 by the Pennsylvania Human Relations Commission.
While not part of the DOJ settlement, on July 13 Wells Fargo discontinued funding mortgages that are originated, priced and sold by independent mortgage brokers through its mortgage Wholesale channel.