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By Jonathan Stempel
NEW YORK, April 26 (Reuters) - Wells Fargo & Co. (WFC.N), the fifth-largest U.S. bank, has agreed to pay up to $6.8 million to settle a class-action lawsuit accusing it of improper nonprime mortgage lending practices in California.
In a joint statement on Thursday, the San Francisco-based bank and lawyers for the plaintiffs said Wells Fargo Financial Inc. will earmark $2.4 million to provide relief to class members who are more than 60 days late on loan payments.
Wells Fargo Financial also agreed to make up to $4.4 million in cash payments to class members who submit claims. It said it will also continue improvements it has made in its lending practices for three years.
The settlement resolves a lawsuit filed in December 2003 in San Francisco Superior Court and requires court approval.
In that lawsuit, the Association of Community Organizations for Reform Now (ACORN), an advocacy group for lower-income people, alleged Wells Fargo Financial failed to properly disclose points and prepayment penalties to borrowers.
It said the unit also inaccurately reported some borrowers’ loan balances to credit reporting agencies.
The class includes people who obtained secured real estate loans from Wells Fargo Financial between Dec. 18, 1999 and Nov. 20, 2005.
A Wells Fargo spokeswoman confirmed the settlement, but declined further comment. Lawyers for the plaintiffs did not immediately return calls seeking comment.
Headquartered in Des Moines, Iowa, Wells Fargo Financial makes many loans to people with weaker credit histories.
Its parent is the second-largest U.S. mortgage lender, and one of the largest U.S. subprime mortgage lenders. Like many rivals, Wells Fargo is often targeted by groups that accuse it of taking advantage of loan customers.
Shares of Wells Fargo closed Thursday down 21 cents at $36.07 on the New York Stock Exchange.
((Reporting by Jonathan Stempel, editing by J.S. Benkoe; Reuters Messaging: email@example.com, 646 223 6317)) Keywords: WELLSFARGO LAWSUIT/
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