The housing crisis continues to be an area of controversy for California’s corporations. Earlier this week, San Francisco-based Wells Fargo & Co. announced that federal prosecutors from the Department of Justice may seek penalties against it based on alleged violations of fair-lending laws.

The Fair Housing Act makes it unlawful for a lender to discriminate in residential real estate transactions because of race, color, religion, sex, handicap, familial status or national origin. Although a spokesperson for the Department declined to comment on the investigation, it will presumably center on whether Wells Fargo violated these anti-discrimination laws in its mortgage transactions with homeowners. A spokesperson for Wells Fargo stated that the claims “should not be brought” and the company would continue to demonstrate its compliance with fair-lending laws.

The investigation is the latest in a series of lending inquiries against the company. Last year, Wells Fargo was the target of a probe into whether it directed African Americans to subprime loans. It also faced a review of whether it neglected bank-owned homes in minority neighborhoods.

The penalties for lending violations are steep. Last July, the company agreed to pay an $85 million fine to settle Federal Reserve claims that it had falsified information in mortgage documents and pushed subprime loans onto customers who otherwise may have been eligible for prime interest rates. At the time, the fine was the largest of its kind for a consumer-protection enforcement case.

Wells Fargo is the largest mortgage lender in the country, with an estimated 34 percent share of the domestic market. One wonders whether that status makes them an easier target.

Source: Bloomberg, “Wells Fargo Says DOJ May Seek Penalties Over Fair Lending,” Bradley Keoun and Dakin Campbell, May 8, 2012