It all started with our investigation.
Back in 2007, The Chicago Reporter wrote a story about discriminatory lending practices in Chicago. High-cost loans were being doled out in the city's minority neighborhoods. Was it just coincidence, or were banks targeting communities of color for these expensive and complicated loans?
Today, Illinois attorney general Lisa Madigan and the Department of Justice announced a $175 million dollar settlement with one of those banks, Wells Fargo, after a three-year legal battle alleging that the mortgage giant discriminated against black and Latino mortgage-seekers.
“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,” Madigan said, in a news release, adding that her 2009 lawsuit was based on analysis of mortgage data done by the Reporter. “Today’s settlement holds Wells Fargo accountable and requires the bank to invest in and help revitalize the same communities it helped to destroy.”
Of that money, at least $15 million will go to Illinois homeowners who got a sub-prime loan through Wells Fargo between 2004 and 2009.
Chicago Reporter Publisher Kimbriell Kelly first uncovered the lending disparity along with our former-publisher Alden Loury. Check out their recap of the investigation:
According to Madigan's office, it's estimated that more than 3,300 people were victims of discrimination by Wells Fargo brokers, both through steering them into high-cost loans and charging them higher fees.
Those steered into inappropriate loans are expected to receive $15,000 in restitution, while pricing victims will receive an average $2,000 payment.
In addition to the people already identified by the attorney general's office, the company agreed to help identify additional victims who were discriminated against by Wells Fargo employees, who will also be eligible for compensation.
Wells Fargo denies any wrongdoing.
While the settlements mark closure to Madigan's lawsuit, "there are still stories to tell about the impact of this on African American communities," Loury said. Watch:
An independent administrator will contact identified borrowers and distribute payments. Anyone who believes they may have been a victim or wants more information can also email wellsfargo.settlement@usdoj.
Video by Angela Caputo.
© Community Renewal Society 2012
Photo credit: MoneyBlogNewz.