NY Times reporter Matt Roth writes that Wells Fargo intentionally steered minority applicants toward Sub Prime loans as a matter of policy. Other than the NYT article and Raw Story’s link to it, I’ve seen little of this in trad/cable news.
Wells Fargo was one of the most profitable large banks during the home mortgage boom. They rode the crest of the Sub Prime wave, apparently by officially enforcing racist policies that included steering African American and other minority applicants away from traditional, low-risk fixed-rate mortgages into more risky, sub prime loans.
According to loan officer Beth Jacobson, Wells Fargo Bank “rode the stagecoach from hell” for a decade, systematically singling out blacks in Baltimore and suburban Maryland for high-interest sub prime mortgages.
In a federal suit, Baltimore officials claim that Wells Fargo, led legions of families into foreclosures, precipitating mammoth losses in tax revenues needed to provide city services.
Wells Fargo, Ms. Jacobson said in an interview, saw the black community as fertile ground for sub prime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into sub prime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as “mud people” and to sub prime lending as “ghetto loans.”
We just went right after them,” said Ms. Jacobson, who is white and said she was once the bank’s top-producing subprime loan officer nationally. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out sub prime loans.”
Wells Fargo’s practices are in the sites of other states and municipalities. Illinois has investigated whether Wells Fargo, finding violation of violated fair lending and civil rights laws
…by steering black and Latino homeowners into high-interest loans. New York’s attorney general, Andrew M. Cuomo, raised similar questions about the lending practices of Wells Fargo, JPMorgan Chase and Citigroup, among other banks.
The N.A.A.C.P. has filed a class-action lawsuit charging systematic racial discrimination by more than a dozen banks, including Wells Fargo.
“Reverse redlining,” a proactive that singles out black customers as prime targets for their most expensive and onerous loan products, was actively promoted at Wells Fargo. Such practices had grave consequences to customers.
For a homeowner taking out a $165,000 mortgage, a difference of three percentage points in the loan rate — a typical spread between conventional and subprime loans — adds more than $100,000 in interest payments.
Wells Fargo hasn’t officially responded to Relman & Dane, a civil rights law firm representing the City of Baltimore but the city says implications are clear.
“They confirm our worst fears: that this is not just a case based on a review of numbers and a statistical analysis,” said the city solicitor, George Nilson. “You don’t have to scratch your head and wonder if maybe this was just an accident. The behavior is pretty explicit.”
A hearing on the matter is scheduled to commence in late June.