A settlement was announced Thursday in a lawsuit against Wells Fargo that claimed the bank targeted minorities with subprime lending.
Baltimore City filed the lawsuit in 2008 alleging the bank had steered minority customers to subprime mortgages.
In exchange for dropping the lawsuit, Wells Fargo will provide $425 million in lending for purchasing homes in the city in the next five years, give $4.5 million for a lending assistance program for residents who want to buy or renovate a home in the city and pay $3 million for local priority funding and foreclosure related initiatives, according to a news release announcing the settlement.
The settlement also includes $125 million in compensation for black and Hispanic homeowners the suit claims were steered toward subprime mortgages by the bank, even though they were qualified for prime mortgages, and as a result paid higher fees and rates than white borrowers.
In a news release posted on its website, Wells Fargo denied any wrong doing, claiming the mortgages in question had been sold by independent mortgage brokers through its Wholesale channel.
"Wells Fargo is settling this matter solely for the purpose of avoiding contested litigation with the DOJ, and to instead devote its resources to continuing to provide fair credit services and choices to eligible consumers, and important and meaningful assistance to borrowers in distressed U.S. real estate markets," according to the release.