Wells Fargo (NYSE:WFC) is taking a private mediation route to settle allegations that the bank discriminated against Black homeowners by charging them higher interest rates through refinancing, according to a media report.
Lawyers representing the borrowers and the bank said they agreed to work with a former federal judge to resolve a group of class action lawsuits. If that effort succeeds, Well Fargo (WFC) would avoid a trial over allegations that it engaged in a modern version of so-called “redlining.”
The two sides agreed to participate in a mediation session within the next six months with Layn Phillips, a retired judge from Oklahoma, and one of his partners, according to a filing late Friday, Bloomberg reported.
“The parties are unsure at this time whether settlement is likely, but agree to work together in good faith to achieve settlement, if possible and at the appropriate time, with the assistance of a highly regarded private mediator,” the attorneys from both sides said.
The lawsuits said Wells Fargo (WFC) rejected a disproportionate number of Black homeowners’ refinancing applications in 2020 when lower interest rates, triggered by the pandemic, led to a surge in mortgage refinancing.
Bloomberg first reported the disparities in March 2022. At the time, Wells Fargo (WFC) said it treats all potential borrowers the same and is more selective than other lenders. Its own review showed that 2020 refinancing decisions showed that credit-related factors accounted for the difference.
Wells Fargo (WFC) did not immediately respond to a request for comment.
The San Francisco-based bank has been dealing with the aftermath of a string of scandals since 2016, when it was first disclosed that its employees had opened up bogus accounts to meet sales quotas. Last month, it agreed to pay $1B to settle a shareholder lawsuit that alleged that Wells Fargo (WFC) misled shareholders on its progress in its compliance with federal orders.
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