Case Summary: United States v. Wells Fargo Bank, NA (D.D.C.)

On December 19, 2012, the Division notified the court inUnited States v. Wells Fargo Bank(D.D.C.) that the bank will provide $59.3 million in compensation to African-American and Hispanic retail subprime borrowers. Under theconsent order, entered on September 21, 2012, Wells Fargo agreed to undertake an internal review to determine whether there were African-American and/or Hispanic borrowers who received subprime Wells Fargo loans from the bank's retail channel who might have qualified for prime loans from the retail channel. The consent order provided that any borrowers identified pursuant to the review would be compensated in an amount commensurate with the amounts paid to borrowers who received subprime loans from the bank's wholesale division. As a result of its review, Wells Fargo identified nearly 4,000 retail subprime borrowers who are eligible for compensation. With the additional compensation to retail subprime borrowers, the Division's settlement with Wells Fargo totals $234.3 million. Thecomplaint, filed on July 12, 2012, alleged 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 alleged 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 alleged 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 provided $125 million in compensation for wholesale borrowers who were allegedly steered into subprime mortgages or who allegedly paid higher fees and rates than white borrowers because of their race or national origin. Wells Fargo was also required to pay $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.