Wells Fargo will fund a $100 million mortgage assistance fund for low- and moderate-income borrowers after a federal judge approved a $110 million total settlement Monday over discriminatory hiring and lending practices.
Judge Trina Thompson of the U.S. District Court for the Northern District of California signed off on the deal, which combined multiple lawsuits alleging Wells Fargo approved fewer than half of Black homeowners’ refinancing applications in 2020. The bank also allegedly staged sham interviews with nonwhite candidates to create the appearance of hitting diversity targets.
The remaining $10 million is a Board of Directors insurance payment back to Wells Fargo, a structure that shifts some financial pain onto the executives whose governance the suit scrutinized. Thompson called the settlement “historic” and a “gold standard.”
Plaintiff counsel Mark Molumphy of Cotchett, Pitre & McCarthy said the fund will provide down payment and closing cost assistance to thousands of borrowers. What he didn’t say: the shareholder plaintiffs bringing this suit were shareholders, not Black homeowners who were turned away. This is a derivative action brought on behalf of Wells Fargo shareholders, and the $100 million doesn’t go to discriminated-against borrowers. It goes to a new program that future applicants will benefit from.
The bank’s spokesperson called it “pleased” to settle, which tracks: the alternative was defending those 2020 approval numbers in front of a jury.
The $100 million fund launches next.
— Marcus Webb