Today's Department of Justice fair lending settlement with Wells Fargo Bank is welcome news, and highlights the benefits of new mortgage rules to combat predatory lending. The DOJ settlement of $175 million settles charges that Wells Fargo steered about 4,000 African-American and Hispanic families into higher-cost subprime mortgages while white borrowers with similar qualifications received safer, cheaper prime loans. DOJ also found that about 30,000 people of color paid more for their mortgages in fees and rates because of their race or ethnicity.
New and pending mortgage originator rules from the Federal Reserve and Consumer Financial Protection Bureau have begun to stop these pernicious practices. The impact of discriminatory pricing on African-American and Latino communities has been severe and will take generations to remedy. We commend DOJ for pursuing this and other cases to address pricing discrimination and the steering of borrowers into bad home loans.
For more details on the Wells Fargo settlement, see the DOJ's website at http://www.justice.gov/opa/pr/2012/July/12-dag-869.html. See also CRL's report, "Foreclosures by Race and Ethnicity" at http://rspnsb.li/LchK1i.