Wells Fargo will fund a new $100 million mortgage borrower assistance fund, following a federal judge's final approval of a large settlement agreement. 

U.S. District Judge Trina Thompson OK'ed the terms last week, which resolved some longstanding claims regarding the bank's alleged discriminatory hiring and lending practices. The agreement also includes a $10 million insurance payment to Wells' board of directors, and $27.5 million in attorneys' fees and expenses awards.

The program will assist low- and moderate-income borrowers currently residing in, or purchasing property in low- and moderate-income census tracts, according to the settlement. Those tracts cover dozens of the nation's largest metropolitan areas, and the program will last for a minimum of three years. 

The deal and its terms were previously announced last September, and Thompson granted preliminary approval to the settlement in January. The sides have an August deadline to file a declaration to the court explaining the status of the program.

According to a law professor who provided an expert analysis of the settlement in a case filing, the $100 million program could result in additional mortgage origination volume for Wells of up to $2.5 billion. 

Wells, despite pulling back some of its mortgage operations in recent years, is still a significant lender and reported $6.3 billion in retail originations in the recent first quarter.

"Today's settlement launches a new program that will provide down payment and closing costs assistance to thousands of low- and moderate-income borrowers and help them obtain the benefits of homeownership," said Mark Molumphy, partner at Cotchett, Pitre & McCarthy, in a statement Friday on behalf of plaintiffs. 

A spokesperson for Wells Monday said the company is pleased to have reached a settlement. 

Wells' mortgage litigation history

The recently finalized deal quells some of the legal heat the bank has faced this decade regarding accusations of "modern-day redlining." Those complaints began brewing with a Black homebuyer's complaint against Wells in February 2022, and lawsuits accelerated after a Bloomberg report that March, which suggested a gap between the bank's approval of white and Black refinance applicants. 

After several similar complaints were consolidated, a federal judge last August denied those plaintiffs' attempts to certify a class of over 100,000 affected borrowers against Wells Fargo. Some of the plaintiffs in those cases recently reached confidential settlements with the bank, according to case filings this month. 

Earlier this year, separate plaintiffs also filed a renewed class action complaint against Wells Fargo related to its miscalculations around the cost of loss mitigation for multiple borrowers. That suit claims Wells benefited off of homeowners who paid excessive monthly payments, were foreclosed upon or suffered from both actions.

The lender denied the renewed accusations in a California federal court earlier this month.