Wells Fargo Target Of Justice Department Probe

Wells Fargo Target Of Justice Department Probe
Agency Alleges Discriminatory Lending

Shahien Nasiripour
Huffington Post
7/26/11

WASHINGTON — The Department of Justice is preparing a lawsuit against Wells Fargo, the nation’s largest home mortgage lender, for allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans, according to three people with direct knowledge of the probe.

The company, the fourth-largest U.S. bank by assets, is currently embroiled in pre-lawsuit negotiations with the Justice Department in hopes it will settle the accusations and avoid a public lawsuit, these people said.

The allegations mirror those in public actions taken by the Federal Reserve and a separate lawsuit filed by the city of Baltimore.

Last week, the Fed said that perhaps more than 10,000 borrowers were inappropriately steered into subprime mortgage loans or had their loan documents falsified by bank personnel. Wells Fargo agreed to pay $85 million to settle the civil charges. It did not admit wrongdoing.

In its ongoing case against Baltimore, Wells Fargo stands accused of using those same practices, but deploying them against black borrowers in majority-black neighborhoods, an act commonly known as “reverse redlining.” The city alleges that the bank targeted black borrowers, knowing they’d ultimately default on their loans, but did not fear shouldering the cost because Wells sold those loans to investors. Wells Fargo denies the allegations.

“We have a very strong commitment to serving all customers along the credit spectrum, and we do so without bias,” said Vickee Adams, a spokeswoman for Wells Fargo. “That’s the type of responsible lending that we practice.” Adams declined to comment on the Justice probe.

The previously-undisclosed Justice probe, which is being led by the Civil Rights division’s Fair Lending Unit, lends credence to the city’s lawsuit, sources told The Huffington Post. The official overseeing the office, Assistant Attorney General Thomas E. Perez, previously served as secretary of Maryland’s Department of Labor, Licensing and Regulation, a consumer protection agency that regulates mortgage and foreclosure terms and houses the state’s financial regulator.

http://www.huffingtonpost.com/2011/07/26/wells-fargo-justice-department-probe_n_910425.html

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