As two educated African Americans, my husband and I had difficulty securing a mortgage. But many of my peers—some who earned less or or had no job —were able to secure a home with no problem. It made me start to wonder if race played a role.
Chicago, Ill. (PRWEB) July 12, 2012
The U.S. Department of Justice and Illinois Attorney General Lisa Madigan today announced a $175 million joint settlement with Wells Fargo over discriminatory lending practices (case number 09CH26434 in the Cook County Circuit Court). The settlement resolves allegations that the lender and its brokers steered African-American and Latino borrowers into risky subprime loans more often than similarly situated white borrowers and charged minority borrowers more for their loans during the nation’s housing boom.
The DOJ and Illinois AG’s office began their lawsuits after reading a 2005 story in The Chicago Reporter, “Costly Choices: Lending Disparities Continue for Blacks.” Publisher and Editor Kimbriell Kelly launched the investigation because of her own personal experiences.
Said Kelly, “I began my investigation shortly after I got married. My husband and I were searching for a new home and as two educated African Americans, we had much difficulty in securing a mortgage. But at the same time, many of my other peers—some who earned less or had no job at all—were able to secure a home with seemingly no problem. It made me start to wonder if race played a role. In the end, I found out through my investigation that for many African Americans, it did.”
Coinciding with news of the Wells Fargo settlement, Kelly today was named one of Chicago’s “100 Women to Watch 2012” by Today’s Chicago Woman.
Today’s announcement concludes Illinois Attorney General Lisa Madigan’s 2009 lawsuit that alleged illegal discrimination by Wells Fargo in its lending practices against African-American and Latino homeowners. The settlement provides for at least $15 million in restitution to Illinois borrowers whose loans were originated between 2004 and 2009.
“Wells Fargo’s discriminatory lending practices were illegal. They helped destroy a generation of wealth in African-American and Latino communities in the Chicago metro area,” said Madigan. “Today’s settlement holds Wells Fargo accountable and requires the bank to invest in and help revitalize the same communities it helped to destroy.”
In making their announcement, the Illinois AG’s office reported that at least 3,300 Illinois borrowers are so far estimated to be victims of discrimination by Wells Fargo brokers, whether they were steered into subprime mortgages or charged higher fees than white borrowers. Illinois victims will receive at least $8 million in relief in cash payments. On average, steering victims are expected to receive a payment of $15,000, and pricing victims will receive an average $2,000 payment. However, actual damages will depend on individual circumstances, and consumers may receive more or less than the averages. Wells Fargo also agreed to identify additional victims who were discriminated against by its employees and will provide similar relief for those borrowers.
An additional $7 million will fund down payment assistance for Illinois borrowers in need.
In addition, the settlement provides for an independent administrator, who will contact identified borrowers and distribute compensation payments. Individuals who believe they were victims and have questions about eligibility also can email wellsfargo.settlement(at)usdoj(dot)gov for more information.
The Chicago Reporter is published by the Community Renewal Society. For the last four decades, the bi-monthly magazine and its website are “must reads” for legislators, policy makers and academics. Among its subscribers and financial supporters have been President Barack Obama and his senior advisor, David Axelrod. The Ford Foundation’s Freedom of Expression Unit has provided major support for the magazine over the last decade.
The Chicago Reporter’s investigations have had major impacts at the national, state and local levels and its staffers have won numerous awards, including the Sigma Delta Chi Award for Public Service from the Society of Professional Journalists, the Clarion Award, dozens of Lisagor Awards and a series of Kogan Awards from the Chicago Bar Association.
The news of the new Wells Fargo settlement is timely, coming a day before the magazine kicks off a year long celebration of its 40th anniversary with private reception on the Chicago Public Radio terrace at Navy Pier. Forums on criminal justice and public housing are planned as is a show in collaboration with NPR’s “Wait Wait…Don’t Tell Me!” in the spring of 2013.
For more information or to read the latest news, please visit: http://www.ChicagoReporter.com