SAN FRANCISCO—A federal judge has granted final approval to a $110 million shareholder derivative settlement involving Wells Fargo that resolves claims the bank’s directors and senior executives failed to properly oversee its mortgage lending practices.
HousingWire reported the approval, announced May 15, clears the way for expanded mortgage assistance programs aimed at low- and moderate-income borrowers in more than 50 metropolitan areas across the country.
Under the settlement, Wells Fargo will provide $100 million to establish a borrower assistance program designed to support communities disproportionately affected by barriers to mortgage lending, HousingWire reported. The program will include grants and closing-cost assistance for eligible borrowers purchasing homes or living in designated metropolitan areas.
Program to Remain for Three Years
According to court approval documents cited by HousingWire, the borrower assistance program “will remain in existence for a minimum of three years after the final approval of the settlement.”
HousingWire reported the settlement also includes a separate $10 million payment through directors and officers insurance coverage. In addition, plaintiffs’ attorneys requested $27.5 million in legal fees and litigation costs, which court filings said would be paid separately from the borrower assistance fund and insurance payment.
The lawsuit, filed in 2022 on behalf of Wells Fargo shareholders, alleged the bank’s board failed to maintain adequate oversight of mortgage lending operations and lacked an effective committee to monitor lending practices, according to HousingWire.
Where Programs are Available
Plaintiffs argued the alleged governance failures exposed the bank to regulatory scrutiny, civil and criminal investigations, and significant compliance-related costs, HousingWire reported.
Wells Fargo said the borrower assistance programs will be available in metropolitan markets across California, Texas, Florida, Georgia, New York, New Jersey, Pennsylvania and the Washington, D.C., region, among others.
