BALTIMORE (WJZ)— Wells Fargo Bank has settled a multi-million dollar lawsuit and the city will get a chunk of the money.
Andrea Fujii explains the bank was accused of mortgage discrimination.
The city claimed the bank pressured residents into bad deals because of the color of their skin.
The city claims that for five years Wells Fargo targeted at least 1,000 residents in minority neighborhoods for subprime mortgages.
They filed a lawsuit against the bank in 2008 and the Department of Justice followed.
“If you were African-American or Latino, you were more likely to be placed in a subprime loan or pay more for your mortgage loan,” said Thomas Perez, Assistant U.S. Attorney General.
Wells Fargo has now agreed to pay $175 million to eight cities and states, including Baltimore, which will get $7.5 million for lending assistance programs and foreclosure initiatives.
“This new money will assist those looking to buy new homes and trying to refinance by providing renovation money,” said Mayor Stephanie Rawlings-Blake.
The settlement also includes restitution for the city residents affected. Within the year they will be paid on average $15,000 each.
The bank issued this statement: “Wells Fargo is settling this matter because we believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight, and to instead devote our resources to continuing to contribute to the country’s housing recovery.”
A recovery that the Department of Justice says starts with fair mortgages.
“They should be judged by the content of their credit worthiness and not the color of their skin,” Perez said.
In their investigation the Department of Justice found that African-Americans were three times more likely to be placed in a subprime loan than a white applicant.
In the settlement, Wells Fargo is also committing to lend city homebuyers $425 million over the next five years.
Wells Fargo has since implemented several fair lending reforms.