(Corrects tally of pledged amounts in headline and first two paragraphs.)
Wells Fargo & Co. (WFC:US), the largest U.S. home lender, pledged more than $432 million in mortgage credit and investments as it resolved a discrimination lawsuit brought by Memphis, Tennessee.
The bank will invest $7.5 million in the city and the surrounding Shelby County, including $4.5 million in home- renovation and down-payment grants, and will seek to make $425 million in mortgages available over the next five years, according to a statement from the San Francisco-based company. The sum includes $125 million in loans for low- and moderate- income borrowers.
Wells Fargo is battling U.S. Justice Department allegations that it singles out minority homeowners for worse treatment, and it’s facing scrutiny by the Department of Housing and Urban Development over claims that it neglects bank-owned homes in minority communities. Today’s accord ends a suit (WFC:US) filed more than two years ago alleging the firm mistreated black homeowners since at least 2000.
“We agreed that it was in the best interests of everyone involved to work together rather than to continue to be involved in a protracted legal fight,” Leigh Collier, Wells Fargo’s regional president for the Mid-South, said in a statement.
The lawsuit, citing former employees, claimed that Wells Fargo steered nonwhites toward loans with higher rates and fees and terms that were less advantageous. Memphis also alleged the bank pushed homeowners into bigger loans than they needed.
Wells Fargo said this month that federal prosecutors may seek damages and penalties after investigating whether it violated anti-discrimination laws while financing homeowners. The company didn’t elaborate on the complaint, adding that the bank is trying to show the agency that it’s following the law. Wells Fargo also still faces a 2008 lawsuit by Baltimore alleging “illegal and discriminatory mortgage lending” that caused foreclosures in minority neighborhoods.
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