Wells Fargo Singled Out Blacks for Subprime Mortgages, Suit Alleges
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Wells Fargo targeted members of the black community for subprime, high interest mortgages, referring to its targets as "mud people" and the loans given to them as "ghetto loans", according to Wells Fargo's top-producing subprime loan officer nationally. A lawsuit filed by the City of Baltimore against Wells Fargo contains stunning evidence of a practice by one of the nation's largest lenders that tipped homeowners into foreclosure.
According to an interview with The New York Times, Beth Jacobsen, a former loan officer with Wells Fargo, Wells Fargo saw the black community as "fertile ground" for subprime mortgages, as working class blacks were hungry to be part of the dream of owning a home. Accordingly, customers that would have otherwise qualified for a prime loan were pushed into subprime mortgages, with both fees and interest rates in excess of those involved with a prime loan. Affidavits filed in the lawsuit filed by Baltimore indicate that employees of Wells Fargo referred to blacks as "mud people" and subprime lending as "ghetto loans." These same affidavits speak of loan officers falsifying financial information for applicants, with Wells Fargo and their employees reaping the financial rewards from the fees generated from each of these loans.
"We went right after them," said Ms. Jacobsen who is white. "Well Fargo mortgage had an emerging markets unit that specifically targeted black churches, because it figured church leaders had alot of influence and could convince congregants to take out subprime loans."
The City of Baltimore, who contends that it has lost millions of dollars in tax revenue by reason of Wells Fargo's actions from the resulting foreclosures, isn't the only one that has complained of Wells Fargo's practices. The Illinois Attorney General has investigated whether Wells Fargo violating fair lending and civil rights laws; New York's Andrew Cuomo raised similar allegations; and the NAACP filed a class action lawsuit alleging systematic racial discrimination by more than dozen banks, including Wells Fargo. The New York Times recently conducted an analysis of mortgage lending in New York City and concluded that black households making more than $68,000.00 per year were nearly five times as likely to hold subprime mortgages than whites with similar or even lower incomes.
Shipman & Wright, LLP has fought predatory lending practices for years, and there are both State and Federal laws that protect consumers against these practices.