WHO GETS Wells Fargo home-loan discrimination settlement cash? "The Department of Justice will identify individuals for compensation within 45 days and then a settlement administrator will make best efforts to contact these individuals within six months," says the bank.
EARLIER: Wells Fargo Bank, the largest U.S. home mortgage lender, has agreed to pay $175 million to black and Latino borrowers who were overcharged for home loans from 2004 to 2009 when Wells or its predecessors "steered" them into high-interest-rate "subprime" mortgages even though their credit records showed they should have qualified for lower-rate standard mortgages.
"Wells Fargo will also provide $50 million in direct down payment assistance" in neighborhoods "that were hard hit by the housing crisis" and where many borrowers suffered loan "discrimination," says the Justice Department in a statement.
In the Philadelphia area, where Wells Fargo is the dominant bank, "at least 1,030 victims" could potentially "receive more than $2 million in damages" and some homebuyers could quailfy for up to $15,000 in downpayment assistance, Justice spokeswoman Patricia Hartmann told me.
UPDATE: Wells Fargo "denies the claims" it discriminated against black and Latino borrowers by charging them higher rates -- but the bank also "agreed to pay" anyway to "avoid litigation" the bank says here.
Wells Fargo adds that the U.S. claims (including complaints by Pennsylvania, Illinois and Baltimore agencies) "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."
Wells Fargo also said that, starting tomorrow, "it will discontinue funding mortgages that are originated, priced and sold by independent mortgage brokers" through the bank's wholesale funding operation. Broker home loans have been 5% of the bank's total. "Mortgage brokers operate as independent businesses and are not employed by Wells Fargo. Therefore, Wells Fargo cannot set loan prices for independent mortgage brokers."
The bank claims the simultaneous decision to drop brokers is not related to the discrimination settlement.