REFILE-Justice Dept. presses Wells Fargo on loans-source

(Refiling to correct name in headline to Wells Fargo from Well Fargo)

* Justice eyes Wells for targeting Afro-Americans - source

* Subprime loans focus of settlement talks - source

* Justice, Wells decline comment

NEW YORK, July 27 (Reuters) - Wells Fargo & Co (WFC.N) and the U.S. Department of Justice are negotiating to settle allegations that the bank illegally targeted African-Americans for expensive subprime loans, according to a source familiar with the matter.

The source, who declined to be identified because the talks were not public, said the bank was talking with lawyers from the department's civil rights division.

The case is separate from other government investigations of banks over mortgages, including a pending joint action by state attorneys general and another section of the Justice Department over foreclosure practices, such as robo-signing of documents for court cases.

The talks follow Wells Fargo's agreement last week to pay an $85 million civil penalty to the Federal Reserve Board over allegations that it steered borrowers into costly subprime mortgages and falsified their financial qualifications. [ID:nN1E76J1IZ]

The Justice Department investigation was reported earlier by the Huffington Post. huff.to/n5Z68j

The Justice Department declined to comment. Wells Fargo spokeswoman Vickee Adams declined to comment on the civil rights case. She said the Federal Reserve case did not include allegations involving ethnic minorities.

The bank continues to fight lawsuits brought by the cities of Baltimore and Memphis charging that the bank hurt them with subprime loans, Adams said. (Reporting by David Henry; editing by John Wallace)