Wells Fargo Pledges $435M in Grants, Loans to End Memphis Suit

Wells Fargo is committing $435 million in mortgages, grants and other assistance with down payments and home renovations under an agreement to end a lawsuit filed more than two years ago alleging discrimination against African-American homeowners.
The top U.S. lender is launching a five-year program to assist homeowners in Memphis and Shelby Counties in Tennessee. The lawsuit was brought by the city of Memphis.
Under the agreement, Wells Fargo will provide grants totaling $4.5 million covering down payments and renovations. Individuals who want to buy homes and live in Memphis and Shelby County can qualify for grants worth up to $15,000 each.
The sum includes $125 million in loans for low- and moderate-income borrowers.
“We agreed that it was in the best interests of everyone involved to work together rather than to continue to be involved in a protracted legal fight,” said Leigh Collier, Wells Fargo regional president for the Mid-South, which includes Memphis.
The lawsuit claimed that Wells Fargo steered non-whites toward loans with higher rates and fees. Memphis also alleged the bank pushed homeowners into bigger loans than they needed.
Wells Fargo said earlier this month that the U.S. Justice Department is seeking “monetary damages and civil penalties” over possible violations of fair lending, or anti-discrimination, laws.
The bank said in a regulatory filing that government agencies continue investigations or examinations of mortgage-related practices.
“The investigations relate to two main topics: (1) whether Wells Fargo may have violated fair lending or other laws and regulations relating to mortgage origination practices; and (2) whether Wells Fargo properly disclosed in offering documents for its residential mortgage-backed securities the facts and risks associated with those securities,” Wells Fargo said.
Under the Memphis settlement, prospective home buyers can qualify for Wells Fargo grants if they have a family income that does not exceed 120 percent of the area median income, and must complete an eight-hour home buyer education session with an approved non-profit.
Prospective homeowners also must agree to live in the home for five years. If they move sooner, they will have to return a pro-rated portion of the down payment or renovation grant.

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