Accusing Wells Fargo & Co. of discriminating against minority borrowers by steering them into subprime mortgages, Illinois' attorney general sued the San Francisco bank, asking a state court to negate the loans and to fine Wells, the nation's largest home lender.
"The dreams of many hardworking families have ended in foreclosure due to Wells Fargo's illegal and unfair conduct," Atty. Gen. Lisa Madigan said in filing the lawsuit Friday in Cook County Circuit Court.
Wells Fargo disputed the allegations in the suit, which contends that the bank provided incentives to employees to steer borrowers into high-cost subprime home loans. It says African Americans and Latinos were sold these loans more frequently than white borrowers with similar incomes, who generally received lower-cost prime mortgages.
The suit also contends some borrowers were led to believe that they were getting loans from Wells Fargo Home Mortgage, which is principally a prime lender, when in fact their loans were from a subprime unit, Wells Fargo Financial.
In a statement, Wells Fargo maintained that it has systems to ensure all borrowers are treated equally.
"Our pricing is competitive and reflects the risk in the transaction including credit, loan type, loan-to-value ratio, and property type," Wells said. "Prime pricing is made available to all borrowers who qualify."