The U.S. Department of Justice and Wells Fargo Bank Thursday announced a $175 million settlement of allegations that the bank discriminated against African-American and Hispanic borrowers who obtained home mortgages between 2004 and 2009.
The Justice Department simultaneously filed a lawsuit alleging bias and the proposed settlement in U.S. District Court in Washington, D.C., Thursday.
A federal judge must approve the settlement before it is final.
The lawsuit alleges that an estimated 34,000 African-American and Hispanic home buyers who obtained mortgages directly or indirectly from Wells Fargo were steered into costlier subprime loans or required to pay higher fees and rates than similarly qualified non-Hispanic whites.
San Francisco-based Wells Fargo does not admit any wrongdoing in the settlement.
"Wells Fargo is settling this matter because we believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight," said Wells Fargo Home Mortgage President Mike Heid.
The bank wishes "to instead devote our resources to continuing to contribute to the country's housing recovery," Heid said in a statement.
Deputy U.S. Attorney General James Cole said, "The department's action makes clear that we will hold financial institutions accountable, including some of the nation's largest, for lending discrimination.