Wells Fargo has agreed to create a $100 million mortgage assistance fund dedicated to low- and moderate-income borrowers as part of a legal settlement.
The agreement, approved Monday by Judge Trina Thompson of the U.S. District Court for the Northern District of California, settles a lawsuit alleging discriminatory hiring and lending practices.
The lawsuit, which combined multiple cases, alleged that Wells Fargo approved less than 50% of Black homeowners’ refinancing applications in 2020 and also alleged that the bank set up “sham” interviews with nonwhite candidates to appear as if it were hitting certain employee diversity goals.
The borrower assistance fund “represents a meaningful step toward expanding equitable access to financial services,” Thompson wrote. “For many individuals and communities historically excluded from traditional lending pathways, this program signals a shift toward more inclusive underwriting practices and a deeper recognition of systemic barriers.”
The settlement also requires $10 million to be paid by the insurers of the Board of Director Defendants to Wells Fargo.
A Wells Fargo spokesperson said the bank is “pleased to have reached a settlement.”
“The public has the right to expect that Wells Fargo’s hiring and lending decisions will be based on legitimate factors,” Mark Molumphy, a partner at Cotchett, Pitre & McCarthy, which represented plaintiffs, said in a prepared statement Monday. “Home ownership is a cornerstone of the American dream and has even more profound benefits for families from historically underserved communities.”
“Today’s settlement launches a new program that will provide down payment and closing costs assistance to thousands of low- and moderate-income borrowers and help them obtain the benefits of homeownership,” he said.
