Posted By JON PRIOR On March 24, 2011
A Los Angeles Superior Court jury ruled against Wells Fargo (WFC : 32.02 +1.52%) Thursday in a mortgage discrimination case, awarding borrowers $3.5 million.
The class-action lawsuit alleged the bank knowingly discriminated against borrowers in minority neighborhoods. As a result, borrowers were charged more for their loans than those in predominately white areas of Los Angeles County, the court ruled.
The borrowers participating in the class-action case will receive $4,000 each in damages. Plaintiffs originally asked for $24 million total for an original 7,000 plaintiffs. Those participating the class received first-lien mortgages of more than $150,000 between May 2002 and December 2005.
Plaintiffs alleged that in 2002, Wells introduced a computer program called “Loan Economics” that they said gave loan officers the ability to offer applicants lower pricing on a loan. However, branch managers in minority neighborhoods disallowed the use of the program
Wells Fargo said in a statement Thursday that the program was an internal tool only that helped staff determine commission accounting, not loan pricing.
“We are disappointed with the jury’s decision, and we do not believe that it is in line with the law and the facts of this case. We are evaluating our post-trial options. And, as we have said from the beginning, Wells Fargo is committed to serving all customers responsibly and fairly,” Wells said. “Pricing decisions were left to the discretion of loan officers, who were always free to offer borrowers lower prices.”
A. Barry Cappello, a partner at Cappello & Noël and the attorney for the plaintiffs, said the jury found that race, color and national origin was a “motivating reason” for how Wells treated these customers.
“The culture at Wells Fargo Bank only pays lip service to fair lending,” Cappello said. “No systems are in place to prevent managers from engaging in the most insidious form of discrimination against customers who are least equipped to deal with it.”