Wells Fargo Discriminated Blacks, Latinos, & Other Minority

Wells Fargo agreed to pay $175 million to settle charges that it discriminated against thousands of blacks, Latinos, and other minority borrowers between 2004 and 2009, the Department of Justice announced Thursday, July 12. The Justice Department had accused Wells Fargo, the country's largest mortgage lender, of charging minority borrowers higher interest rates and fees on home loans than it charged white borrowers with similar credit ratings.

Wells Fargo will use $125 million to compensate affected borrowers. The remaining $50 million will go toward helping people in eight metropolitan areas' minority communities, including Baltimore's, make down payments or improve their homes.

The Justice Department says Wells Fargo engaged in a pattern of systemic discrimination in which some 30,000 minority borrowers across 36 states were charged higher fees and interest rates than their white counterparts. A black borrower in Chicago, for example, paid an average of nearly $3,000 more in fees than a white applicant who had the same credit rating. A Latino borrower paid more than $2,000 extra. The average "surtax" for a black borrower in the Miami area in 2007 was $3,657. In addition, Wells Fargo steered some 4,000 minority borrowers with good credit toward subprime loans — which are usually reserved for those with shaky credit, and have interest rates that often spike after several years.

Though it's coughing up a massive settlement, the bank did not officially admit wrongdoing, and claims that it settled the case "solely for the purpose of avoiding contested litigation" with the government. The bank stopped issuing subprime loans in 2008.

The Justice Department's case against Wells Fargo stems from a lawsuit filed by the city of Baltimore, which found that its minority communities were decimated by the housing crisis. In late 2011, Bank of America settled a similar discrimination lawsuit in which it paid out $335 million.
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U.S. home prices at lowest level in decade

U.S. home prices continued to fall sharply in February to hit the
worst level in nearly a decade, according to a closely followed index
released Tuesday. The S&P/Case-Shiller 20-city composite is at its
lowest level since October 2002.

The index fell 0.8% compared to January levels to take the
year-on-year drop to 3.5%. Of the 20 cities measured, 16 had negative
readings and only three showed gains.

The decline may be due to the typical pattern of diminished interest
during the winter and heightened interest in housing during the spring
and summer, as prices rose 0.2% on a seasonally adjusted basis.

Data-security breach at card processors and U.S. banks

Card-payment processors and large U.S. banks that issue debit and
credit cards were hit by a data-security breach after third-party
services provider Global Payments Inc discovered its systems were
compromised by unauthorized access.

Global Payments said it determined that an unauthorized entity had
accessed its systems and possible customer card data in early March.
Global Payments helps card companies processes electronic transactions
for merchants.

U.S. law enforcement authorities including the Secret Service are
investigating and MasterCard said it has hired an independent
data-security organization to review the incident.

MasterCard announced earlier Friday that it was investigating whether
cardholder account data was improperly accessed. The payments company
said it has alerted law enforcement authorities and notified card
issuers about the potential breach of cardholders' account
information.

Visa said in a statement Friday that it was "aware of a potential data
compromise incident at a third-party entity affecting card account
information from all major card brands." The company emphasized that
there had been no breach of any Visa system, "including its core
processing network VisaNet."

Citigroup Inc said it has been notified by processors of the breach,
while Wells Fargo & Co said it was too early to comment on the
impact. No comment issued by Bank of America Corp.

JPMorgan Chase & Co, as well as American Express and Discover, which
issue their own cards, said they are monitoring customers' accounts
and would issue new cards to anyone whose information may have been
compromised.

Banks and processors emphasized customers would not be held liable for
any fraudulent charges that may occur. Any financial losses from the
data breach would be shouldered by merchants, card issuers and Global
Payments rather than Visa or Mastercard, which operate payment
networks.

30-year mortgage fixed-rate falls to 3.99%

Following various reports of weaker housing data, the 30-year
fixed-rate mortgage average fell to 3.99% in the week ending March 29
from 4.08% in the prior week, Freddie Mac said Thursday in its weekly
report. The rate was 4.86% a year earlier.

To obtain the latest rate, payment of an average 0.7 point was
required, according to Freddie, a buyer of residential mortgages. A
point is 1% of the mortgage amount, charged in prepaid interest.

The 15-year fixed-rate mortgage fell to 3.23% in the latest week from
3.30% in the prior week.

Meanwhile, the average rate on the 5-year Treasury-indexed hybrid
adjustable-rate mortgage decreased to 2.90% from 2.96%.

The 1-year Treasury-indexed ARM fell to 2.78% from 2.84%.