Wells Fargo under U.S. scrutiny
Discriminatory finance claims getting a look, bank says
Wells Fargo & Co., the largest U.S. mortgage lender, said federal prosecutors are considering seeking damages and penalties after investigating whether the bank violated anti-discrimination laws while financing homeowners.
“The Department of Justice has advised Wells Fargo that it believes it can bring claims,” the bank said Tuesday in a regulatory filing, without elaborating on potential allegations. “We believe such claims should not be brought and continue seeking to demonstrate to the Department of Justice our compliance with fair-lending laws.”
Wells Fargo has faced government scrutiny of lending and foreclosures in the wake of the housing crisis as it expands on a record 34 percent share of the U.S. mortgage market. The firm was negotiating with the Justice Department last year to resolve an investigation into whether it directed black loan applicants to subprime loans, a person familiar with the matter said in July. It also faces a U.S. review of whether it neglected bank-owned homes in minority neighborhoods, a person briefed on the case said in April.
Mary Eshet, a spokesman for the San Francisco-based company, declined to comment beyond Tuesday’s filing. Xochitl Hinojosa, a Justice Department spokesman, declined to comment.
Last year’s lending inquiry,
conducted by the Justice Department’s Civil Rights Division, focused on the company’s actions during the housing bubble, the person said at the time.
The firm settled Federal Reserve claims in July that it steered reliable borrowers into subprime loans and falsified information in mortgage documents. In that case, Wells Fargo agreed to pay an $85 million fine, the largest assessed by the Fed in a consumer-protection enforcement case at the time, and compensate clients.
Employees at the Wells Fargo Financial unit pushed customers who may have been eligible for prime interest rates into loans carrying higher rates intended for riskier borrowers, the central bank said in a July 20 statement announcing the accord. The firm didn’t admit wrongdoing in agreeing to settle.
The neglected-home inquiry is linked to claims brought last month by the National Fair Housing Alliance, a nonprofit organization.
The group accused Wells Fargo of violating the Fair Housing Act by letting homes Wells Fargo seized in minority neighborhoods remain in a state of disrepair. The National Fair Housing Alliance said it reviewed 218 properties in eight cities, finding that properties in white neighborhoods were better maintained and marketed than similar buildings in areas with large black and Hispanic populations.
“Wells Fargo conducts all lending-related activities in a fair and consistent manner without regard to race,” Vickee Adams, a bank spokesman, said of those claims at the time.