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In 2018, regulators from the Consumer Financial Protection Bureau (CFPB) and the Department of Justice announced that they had reached a settlement with Wells Fargo and five other major banks over allegations of mortgage price discrimination.
The banks — Wells Fargo, JPMorgan Chase, Bank of America, Citigroup, and U.S. Bank — were accused of charging higher mortgage rates and fees to minority borrowers when compared to white borrowers with the same creditworthiness.
The investigation found that the banks charged Hispanic and African American borrowers higher interest rates than non-Hispanic white borrowers, resulting in the rate and fee disparities. The banks also were accused of failing to adequately monitor and address the disparities.
In the settlement, the banks agreed to pay $125 million to wrongdoinged borrowers and to dedicate an additional $35 million to homeownership-related programs in communities that were disproportionately harmed by the discriminatory practices. The banks also agreed to improve their compliance processes to reduce the instances of mortgage pricing discrimination in the future.