WASHINGTON (Legal Newsline) - Illinois Attorney General Lisa Madigan and the U.S. Department of Justice announced a $175 million joint settlement on Thursday with Wells Fargo over allegedly discriminatory lending practices.
The settlement resolves allegations that Wells Fargo and its brokers directed Latino and African-American borrowers into risky subprime loans more often than similarly situated white borrowers. In addition, Wells Fargo allegedly charged minority owners more for their loans during the U.S. housing boom.
Madigan is the only state attorney general who has brought and resolved a fair lending lawsuit against a national bank.
"Wells Fargo's discriminatory lending practices were illegal," Madigan said. "They helped destroy a generation of wealth in African-American and Latino communities in the Chicago metro area. Today's settlement holds Wells Fargo accountable and requires the bank to invest in and help revitalize the same communities it helped to destroy."
The settlement concludes a 2009 lawsuit filed by Madigan alleging illegal discrimination by Wells Fargo in its lending practices for Latino and African-American homeowners. The settlement provides at least $15 million to Illinois borrowers who originated loans between 2004 and 2009.
At least 3,300 Illinois borrowers were allegedly victims of discrimination by brokers for Wells Fargo, whether they were charged higher fees than white borrowers or steered into subprime mortgages. Victims in Illinois will receive at least $8 million in relief in cash payments. The alleged victims are expected to receive payments of $15,000 and pricing victims will receive $2,000 payments on average. Actual damages will change depending on individual circumstances and consumers may receive more or less than the averages.
Wells Fargo agreed to identify additional victims who were discriminated against by its employees and will provide similar relief for the borrowers.
The remaining $7 million will be used to fund down payment assistance for borrowers in need in Illinois.
The settlement also provides for an independent administrator who will contact identified borrowers and distribute compensation payments.