DOJ Starts Probe on Wells Fargo for Allegedly Preying on Borrowers

Wells Fargo may have gotten out of reverse mortgages, but it’s getting into trouble with the Department of Justice, the Huffington Post reports.

The DOJ has started a probe into Wells Fargo’s lending practices and is preparing a case against the lender for allegedly preying on African-American borrowers during the housing bubble and inappropriately directing them to high-cost subprime loans.

Last week, the Federal Reserve filed a suit against Wells Fargo amidst accusations from Baltimore-area African-American borrowers that they were steered into expensive subprime mortgages, or had loan documents falsified by bank personnel. In this case, HuffPo reports, the bank agreed to pay $85 million to the Reserve to settle the charges, but did not admit to any wrong doing.

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“We have a very strong commitment to serving all customers along the credit spectrum, and we do so without bias,” Vickee Adams, a spokeswoman for Wells Fargo, was quoted as saying in the Huffington Post article regarding the Baltimore case. “That’s the type of responsible lending that we practice.”

The DOJ is currently in pre-lawsuit negotiations with the bank, which may seek to settle the accusations and avoid a public lawsuit, says HuffPo. The probe, which is being led by a Civil Rights division, the Fair Lending Unit, and overseen by Assistant Attorney General Thomas E. Perez, reportedly brings credence to Baltimore’s suit.

The Huffington Post article lists a number of incidents it says are marring the bank’s “once-pristine” reputation, including alleged illegal foreclosure proceedings and Department of Housing and Urban Development audits regarding questionable foreclosure practices.

Read the full article here.

Written by Alyssa Gerace