WASHINGTON -- Homebuyers in the Greater Cleveland area stand to benefit from a settlement filed by the Justice Department to resolve allegations that Wells Fargo Bank engaged in a practice of discrimination against qualified African-American and Hispanic borrowers.
The $175 million settled is the second largest fair lending settlement in the Justice Department's history.
The settlement provides $125 million in compensation for wholesale borrowers who were steered into subprime mortgages or paid higher fees than white borrowers because of their race.
Wells Fargo will also implement an assistance program that provides $50 million in down payment assistance to residents in eight U.S. metro areas including the Cleveland-Elyria-Mentor areas. Qualified homebuyers in these metro areas could receive up to $15,000 each for down payment assistance, closing costs or under certain circumstances home repair financing.
Wells Fargo has also agreed to review its mortgage lending and compensate African-American and Hispanic retail borrowers placed into subprime loans.
"Few cities in the United States were hurt by the mortgage collapse the way Cleveland was," said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. "Today's settlement provides badly needed money that can be used to revitalize Cleveland neighborhoods by helping bring buyers back to neighborhoods or, in some cases, fixing up homes in need of repair."
The Justice Department alleges that between 2004 and 2008, Wells Fargo steered approximately 4,000 African-American and Hispanic wholesale borrowers and additional retail borrowers into subprime mortgages.
The United States also alleges that, between 2004 and 2009, Wells Fargo discriminated by charging approximately 30,000 African-American and Hispanic wholesale borrowers higher fees and rates.