Tweet
Wells Fargo has agreed to a $175 million settlement with the Justice Department on housing discrimination charges. The settlement reflects an effort on the part of the DoJ’s Civil Rights Division to seek some measure of accountability for the pervasive discrimination against African-American and Hispanic borrowers during the housing bubble. But the numbers involved are a pittance.
An investigation by the department’s civil rights division found that mortgage brokers working with Wells Fargo had charged higher fees and rates to more than 30,000 minority borrowers across the country than they had to white borrowers who posed the same credit risk, according to a complaint filed on Thursday along with the proposed settlement.
Wells Fargo brokers also steered more than 4,000 minority borrowers into costlier subprime mortgages when white borrowers with similar credit risk profiles had received regular loans, a Justice Department complaint found. The deal covers the subprime bubble years of 2004 to 2009.
Thomas Perez, the assistant attorney general for the civil rights division, said the practices amounted to a “racial surtax,” adding: “All too frequently, Wells Fargo’s African-American and Latino borrowers had no idea they could have gotten a better deal — no idea that white borrowers with similar credit would pay less.”
$125 million would go toward compensating individual borrowers, with about $15,000 on average for those steered into subprime loans, and $1,000 to $3,500 for those who suffered with increased fees. The other $50 million will fund a program for housing assistance in eight heavy minority areas across the country.
As we have seen with practically every other financial industry settlement over the past several years, Wells Fargo did not have to admit wrongdoing in the case. An admission of guilt would open them up to civil lawsuits from the individuals affected. In fact, all the civil lawsuits put together by states like Illinois and Pennsylvania and the city of Baltimore were folded into this settlement. So that’s a nice cherry on top from DoJ.
The data released with the complaint, however, shows obvious wrongdoing on the part of Wells Fargo. African-American customers paid around $3,000 more in broker fees for the same loan as whites; for Hispanics, around $2,000. And African-American borrowers who could have qualified for prime loans were almost 3 times as likely to get a subprime loan instead.
Wells Fargo rebutted the claims in the case by saying that they reflected poor oversight of independent brokers who made loans on their behalf. But DoJ retained the right to study data on whether the in-house Wells Fargo brokers also discriminated.
People of color have been decimated by the housing crash. They have higher incidences of underwater homes and foreclosures. With foreclosures back on the rise, they again stand at risk of more pain. Small sums of relief for systematic discrimination, just one aspect of the fraud and abuse they suffered, won’t do much to help.
The Obama Administration, through the Civil Rights Division of the Justice Department (a bright spot at DoJ), has investigated fair housing discrimination at a number of lenders and won several settlements. Nobody has been prosecuted for the violations.
18 Comments
Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
One Hundred and Forty Five Mil?!!
There goes their allowance for breakroom ketchup packets.
Hmph! Axiomatically untrue. As soon as that money hits the states, most of them will use it to fill budget holes and give rich people another tax cut. The people who were actually the ones being mistreated will never. See. A. Dime.
What about the other banks and the subprime brokers? Surely Wells Fargo is not the only one.
It would be interesting to see a percent number of how many Dark People got scammed was it 100%? 70% what?
Also who was targeted the uneducated I suspect but what about those of us who wanted to move to certain White Neighborhoods did the banks protect their neighborhoods by scamming any dark person who tried to move there?
Wells Fargo is big in the Pacific Northwest I wonder what Southern Banks did?
There are not many minorities in the Pacific Northwest why single out Wells Fargo when other banks had many more minority customers?
And the shit just keeps rolling downhill until we’re completely inundated. Of course, Wells Fargo didn’t admit to any wrongdoing nor do any of the institutions that engage in the anal rape of the 99% as their business model.
A “bright spot at DoJ?” It looks to me like a pen light with a very weak battery. How is that money to be distributed? Is it as Margaret says, given to the states to distribute as they see fit? Is the money actually tied to names of people scammed out of their money?
When is the ‘bright spot’ going to shine its light on the criminal actions of the banks and indict some people at the top? Oh, that’s right, they are the ones bankrolling 0′s reelection campaign so you can’t rock the boats of the “savvy businessmen.”
Obama really better do more about this Minority voters with homes are the only minorities who have a shot at voting this election with all the new restrictive voting laws. Normally I would say if O does nothing then we will stay home election day.
But how many of us lost our homes while O waited to act?
Wells Fargo is big nationwide. Don’t forget that they absorbed the drug runners’ bank of choice, Wachovia. BofA already paid a “settlement” for the same practice without admitting any wrongdoing.
Is the money actually tied to names of people scammed out of their money?
Very good question seconded.
In case you haven’t noticed, the minority vote is overwhelmingly in Obama’s camp and won’t desert him no matter what is revealed.
Any settlement where one party gives millions in campaign cash/bribes and the other side doesn’t is suspect and if justice ever returns to America will easily be overruled. Maybe we should do a tax strike if O wants to wait 3 years to get us our cash then he should wait 3 years for our taxes.
In case you haven’t noticed nobody is saying O will get minority votes like he did last time.
Well, BearCountry, I consider that you may have used too luminous a comparison, but I’ve a couple of fireflies that are beacons in the night, relative to the brilliance exhibited by minimal fines and no admission of wrongdoing.
I suspect DDay is hoping a wee spark might ignite further “heat” and not just more … smoke.
Always a pleasure to “see” you on the threads.
DW
Polling indicates that O will receive approximately 89% of the black vote and a majority of the Latino vote as well. The only “advantage” for Romney is with white males. In case you haven’t noticed, USA,Inc. has an illusionary democracy with a unitary party duopoly.
From my understanding, the accusation is that independent brokers who used Wells as the loan originator were the ones responsible for the racial profiling. But what I don’t understand is how a whole bunch of independent brokers would show a racial bias. In other words, racial profiling within an organization can make some sense since it could be a sort of enforced policy. But why would it show up across a large number of independent brokers? Something seems fishy here. Was there a policy of racial profiling at Wells that somehow influenced the brokers? Just who are these brokers and how many are there? By what means did DOJ identify racial profiling?
Wells and other banks are now eliminating the use of brokers under the guise of removing a random variable which was creating racial profiling and that was out of their control. But if racial bias originated at Wells, then this will only make matters worse. Also, it will vastly reduce the number of channels through which people can get home loans – an already difficult and time consuming process. There’s more to this than we’re being told.
“. . .“All too frequently, Wells Fargo’s African-American and Latino borrowers had no idea they could have gotten a better deal — no idea that white borrowers with similar credit would pay less.” . . .”
—————–
But the gov’t should have known about this, and should have acted much sooner. The period in question was 2004 – 2009. That’s a long time, and a long time ago.
So the question would be who was actually supressing the usual gov’t audits of this stuff, or were they simply asleep at the switch?
Let’s see if, to pour salt into the wound, next the IRS deems refunds to harmed borrowers as imputed income or some such — i.e., if the borrowers had deducted such fees and interest on prior tax returns. Any bets there — the victims getting victimized again?