An agreement between Wells Fargo & Co., the city of Memphis, Tenn., and Shelby County, Tenn., puts an end to litigation between the parties. The deal will cost the lender less than $8 million.
A story Tuesday, citing sources with knowledge of the arrangement, indicated that the San Francisco-based company will make $400 million available to local borrowers over five years to end a lawsuit filed by Shelby County and Memphis.
But in a statement issued a statement Tuesday, Wells said it will invest $7.5 million in the city and county.
The lender will provide $15,000 grants totaling $4.5 million for down payment and home renovation assistance. Qualified borrowers can’t have a family income that exceeds 120 percent of the area’s median income. They also must complete an eight-hour homebuyer education session with an approved non-profit organization.
The program will be launched later this year. Borrowers need to remain in their properties for five years or return a pro-rated portion of the grants.
Another $3 million will be contributed “to advance local initiatives and programs related to improving economic vitality, preserving public safety, and increasing financial literacy.”
Wells also said it has set a five-year mortgage lending goal of $425 million for the city and county, including $125 million in home-purchase financing for low- and moderate-income borrowers.
Under the agreement, a lawsuit filed against Wells in January 2010 will be dismissed. The complaint alleged that the firm violated the Fair Housing Act with “unlawful, irresponsible, unfair, deceptive and discriminatory” lending practices in mostly black neighborhoods that led to a foreclosure crisis and drained local government funds.
Wells denied the allegations and said it has had a longstanding commitment to fair and responsible lending practices.
“We agreed that it was in the best interests of everyone involved to work together rather than to continue to be involved in a protracted legal fight,” Wells Fargo Regional President for the Mid-South Leigh Collier said in the statement.