Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Illinois files bias suit against Wells Fargo

The second-largest mortgage lender is accused of pushing blacks and Latinos into high-cost subprime loans.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

Is Obama's foreclosure rescue plan working?
Homeowners in trouble are having mixed results applying for President Obama's foreclosure prevention plan. CNNMoney.com readers tell us their tribulations and triumphs trying to get their loans modified or refinanced.
What's most important to you when choosing where to retire?
  • Affordable homes
  • Low taxes
  • Good health care
  • Low crime
  • Nice weather

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

"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 with similar incomes received lower-cost loans from Wells Fargo (WFC, Fortune 500), the fifth-largest U.S. bank, according to the lawsuit filed in Cook County Circuit Court.

Two black Chicago homeowners sued Wells Fargo Monday 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.

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

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.

"Wells Fargo is disturbed that the Illinois attorney general has chosen to file a lawsuit based on a complete mischaracterization of our long-standing commitment to fair and responsible lending," the bank's spokesman, Kevin Waetke, wrote in an email.

"The policies, systems, and controls we have in place - including in Illinois - ensure race is not a factor in the pricing or products we offer," Waetke added.

The case is The People of the State of Illinois v Wells Fargo and Company; Wells Fargo Bank, N.A.; and Wells Fargo Financial Illinois Inc., No. 09CH26434. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
How to enjoy Paris like a local Leave the tourist trail behind and enjoy wine, gastronomy, perfume, art, dance like a Parisian. More
Playboy founder Hugh Hefner through the years Cultural icon Hugh Hefner pushed barriers with his controversial Playboy magazine. He died at the age of 91. More
5 innovators: How we deal with stress The founders of companies like Allbirds, Robinhood and Paperless Post talk about how they deal with stress. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.