LOS ANGELES, March 6 (Reuters) - The Illinois attorney general on Thursday subpoenaed units of Countrywide Financial Corp CFC.N and Wells Fargo & Co (WFC.N) in a probe of whether the companies violated federal lending and civil rights laws by steering minority borrowers into more expensive loans.
The investigation by Attorney General Lisa Madigan follows a Chicago Reporter magazine study finding that Chicago led the nation in high-cost home loans and revealing wide disparities in loan pricing between white and non-white borrowers.
Madigan said in a statement that her office was looking into “reasons for these pricing disparities” and whether the differences were based on valid underwriting and creditworthiness.
Countrywide, the largest U.S. mortgage lender, already faces federal and state investigations of its lending practices, as well as several lawsuits by investors and mortgage holders.
Countrywide said on Thursday that it “will cooperate fully in any investigation by the Attorney General.”
“The company continually analyzes its data and take steps to ensure that the borrowers are treated fairly,” the company said in a statement. “Countrywide is proud of its record of expanding the opportunities for home ownership among low-income and minority communities and welcomes the opportunity to review its practices with the Attorney General.”
Wells Fargo could not immediately be reached for comment.
The Illinois investigation centers on Chicago Reporter findings that black borrowers were three times and Latino borrowers were twice as likely as white borrowers to get high-cost home loans.
Chicago area foreclosures are concentrated in mostly minority communities, which comprise less than 14 percent of the area’s mortgageable properties but account for 34.5 percent of foreclosures, Madigan said.
The subpoenas were sent to Countrywide Home Loans Inc and Wells Fargo Financial Illinois Inc.
Countrywide, which lost more than $1.6 billion in the second half of 2007, essentially stopped making subprime home loans late last year and is set to be bought by Bank of America Corp in a $4.4 billion deal expected to close in the third quarter.
Countrywide was not immediately available for comment.
Reporting by Gina Keating, editing by Richard Chang