Is Predatory Lending a Matter of Corporate Policy at Wells Fargo?
Wells Fargo (NYSE:WFC) said federal prosecutors may seek damages and penalties after investigating whether it violated anti-discrimination laws in financing home loans.
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“The Department of Justice has advised Wells Fargo that it believes it can bring claims,” the bank said today in a regulatory filing. “We believe such claims should not be brought and continue seeking to demonstrate to the Department of Justice our compliance with fair-lending laws.”
The firm was negotiating with the Justice Department last year to resolve a probe into whether it directed black homeowners to subprime loans, a person familiar with the matter said in July. Wells Fargo is also facing a probe into whether it neglected bank-owned homes in minority neighborhoods, a source said in April.
Last year’s inquiry, conducted by the Justice Department’s Civil Rights Division, reportedly focused on the company’s actions during the housing bubble.
In July of last year, Wells Fargo also settled claims it steered reliable borrowers into subprime loans and falsified information in mortgage documents. In that case, the firm agreed to pay an $85 million fine and compensate clients. The Federal Reserve said Wells Fargo Financial pushed customers who may have been eligible for prime interest rates into loans carrying higher rates intended for riskier borrowers, though the firm didn’t have to admit any wrongdoing in agreeing to settle.
The non-profit National Fair Housing Alliance accused Wells Fargo last month of violating the Fair Housing Act by letting homes it seized in minority neighborhoods remain in a state of disrepair. The NFHA said it reviewed 218 properties in eight cities, finding that properties in white neighborhoods were better maintained and marketed than those in areas with large black and Hispanic populations.
Of course, Wells Fargo has denied the claims. At the time, spokeswoman Vickee Adams said, “Wells Fargo conducts all lending-related activities in a fair and consistent manner without regard to race.”
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