Wells Fargo has allegedly been bias in mortgage lending and for their foreclosure policies and it may be facing damages and fines, according to a new Securities and Exchange Commission filing.
Federal banking authorities have advised Wells Fargo of the claim for their alleged bias practices and the bank disclosed the latest development in an ongoing investigation.
“The Department of Justice has advised Wells Fargo that it believes it can bring claims against Wells Fargo for monetary damages and civil penalties under fair lending laws,” the bank said in its 10-Q quarterly filing.
“We believe such claims should not be brought and continue seeking to demonstrate to the Department of Justice our compliance with fair lending laws.”
Most commercial banks are neglecting foreclosed homes in minority neighborhoods compared with those in white communities, according to a housing advocacy group that said it will file Fair Housing Act complaints over the supposed practice.
The National Fair Housing Alliance looked at 1,036 foreclosed homes over the last year in nine markets and said there were “troubling disparities in maintenance and marketing practices” of foreclosed properties in predominantly black and Hispanic neighborhoods.
Wells Fargo has long been among the largest mortgage lenders and emerged in the first quarter as the overwhelming leader, with 34% market share compared to under 11% for runner-up JPMorgan Chase.
However, the bank filing did not elaborate on the accusations by the federal government, but fair-lending cases generally involve providing costlier loans to minorities when they should receive a better deal.
In a fair-lending lawsuit filed in 2009, the Illinois state attorney general accused Wells of selling more costly subprime mortgages more often to blacks and Latinos compared with whites with similar incomes.
Wells Fargo denied wrongdoing and the suit is pending.
The Department of Justice is also investigating whether the bank misled investors in its mortgage bonds.