Wells Fargo To Pay $5 Million To Resolve Discrimination Complaints

Posted by Patrick Barnard on October 09, 2014 No Comments
Categories : Residential Mortgage

Wells Fargo Home Mortgage will pay $5 million to resolve allegations brought by the U.S. Department of Housing and Urban Development (HUD) that it discriminated against women who were pregnant or on maternity leave.

The action comes after six families complained that they were denied Federal Housing Administration-insured mortgages because they were pregnant or on maternity leave. HUD investigated and determined that the bank had violated the Fair Housing Act by making loans ‘unavailable based on sex and familial status; or by forcing women applicants to sacrifice their maternity leave and return to work prior to closing on their loan; and by making discriminatory statements to and against women who were pregnant or who had recently given birth.’

Some of these applicants, according to HUD, ‘sacrificed their maternity leave in order to ensure that their loan closed.’ This resulted in ’emotional distress’ due to ‘the loss of time with their infants and complications that arose in finding emergency child care and establishing the ability to nurse.’

The families reside in Nevada, Nebraska, Texas, Arizona and California.

As per the settlement, Wells Fargo will pay $165,000 to the six affected families, create a fund with at least $3.5 million to compensate other Wells Fargo applicants, and pay as many as 175 claimants $20,000 each.

Further, if there are more than 175 successful claimants, Wells Fargo will replenish the fund with $1.5 million and pay each of the next 75 claimants $20,000 each. Claimants beyond 250 will share a prorated share of $5 million.

Wells Fargo is also mandated to change its underwriting guidelines when it comes to evaluating mortgage loan applications from those on maternity leave to ensure full compliance with the Fair Housing Act.

‘The settlement is significant for the six families who had the courage to file complaints and for countless other families who will no longer fear losing out on a home simply because they are expecting a baby,’ says Julian Castro, secretary of HUD, in a release. ‘I'm committed to leveling the playing field for all families when it comes to mortgage lending. These types of settlements get us closer to ensuring that no qualified family will be singled out for discrimination.’

As per the release, 190 maternity leave discrimination complaints have been filed with HUD, resulting in more than 40 settlements for a total of nearly $1.5 million, since 2010.

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