MORTGAGE LOAN COMPLIANCE®

Two black Chicago homeowners sued Wells Fargo on Monday, July 27, in federal court in the Northern District of California, accusing the San Francisco-based lender of racial discrimination in how it sets rates and fees. Their lawsuit seeks class-action status.

On Friday, July 31, Illinois Attorney General Lisa Madigan filed suit against Wells Fargo & Co, accusing the second-largest mortgage lender of steering blacks and Latinos into high-cost subprime loans.

The suit asked the court to rescind all unfair contracts and grant full restitution to affected consumers. It also asked the court to impose civil penalties for violations.

"As a result of its discriminatory and illegal mortgage lending practices, Wells Fargo transformed our cities' predominantly African-American and Latino neighborhoods into ground zero for subprime lending," Madigan said in a statement.

High foreclosure rates resulted from the illegal sales practices, the state's attorney general said.

Meanwhile, white borrowers that had similar incomes received lower-cost loans from Wells Fargo, the fifth-largest U.S. bank, according to the lawsuit filed in Cook County Circuit Court.

The Illinois suit charged that Wells Fargo Financial misled borrowers in the state about their mortgage terms, misrepresented the benefits of refinancing, repeatedly refinanced or "flipped" loans, used deceptive mailing and/or marketing tools to confuse borrowers.

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