LA court hits Wells Fargo with $3.5 million penalty in discrimination case

[tabatha]

Thursday, March 24th, 2011, 12:53 pm

A Los Angeles Superior Court jury ruled against Wells Fargo (WFC: 31.91 +1.01%) Thursday in a mortgage discrimination case, awarding borrowers $3.5 million.

The class-action lawsuit alleged the bank knowingly discriminated against borrowers in minority neighborhoods. As a result, borrowers were charged more for their loans than those in predominately white areas of Los Angeles County, the court ruled.

The 880 borrowers participating in the class-action case will receive $4,000 each in damages. Plaintiffs originally asked for $24 million total for an original 7,000 plaintiffs. Those participating the class received first-lien mortgages of more than $150,000 between May 2002 and December 2005.

Plaintiffs alleged that in 2002, Wells introduced a computer program called "Loan Economics" that they said gave loan officers the ability to offer applicants lower pricing on a loan. However, branch managers in minority neighborhoods disallowed the use of the program.

Wells Fargo said in a statement Thursday that the program was an internal tool only that helped staff determine commission accounting, not loan pricing.

http://www.housingwire.com/2011/03/24/los-angeles-court-hits-wells-fargo-with-3-5-million-penalty-in-discrimination-case

[mdmc]

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