nmThe nation’s largest home lender Wells Fargo & Co. has been accused of discriminating against minority borrowers by routing them into sub-prime mortgages.

The Illinois state attorney general filed a lawsuit with a charge that the bank sold the more costly mortgages more often to blacks and Latinos as compared with whites with similar incomes. Illinois’ attorney general sued the San Francisco bank, asking a state court to negate the loans and to fine Wells.

While filing the lawsuit in Cook County Circuit Court, the Att. Gen. Lisa Madigan claimed that the dreams of many hardworking families have ended in foreclosure due to Wells Fargo’s illegal and unfair conduct.

Wells Fargo disputed the allegations in the suit, which contends that the bank provided incentives to employees to steer borrowers into high-cost sub-prime home loans. It says African Americans and Latinos were sold these loans more frequently than white borrowers with similar incomes, who generally received lower-cost prime mortgages.

The suit also challenges that some borrowers were led to believe that they were getting loans from Wells Fargo Home Mortgage, which is principally a prime lender, when in fact their loans were from a sub prime unit, Wells Fargo Financial.
But according to Wells Fargo, it has systems to ensure all borrowers are treated equally. They claimed that their pricing is competitive and reflects the risk in the transaction including credit, loan type, loan-to-value ratio, and property type, and prime pricing is made available to all borrowers who qualify without any discrimination.

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