Wells Fargo Target of Justice Department Probe; Agency Alleges Discriminatory Lending

Shahien Nasiripour, Huffington Post, July 26, 2011

The Department of Justice is preparing a lawsuit against Wells Fargo, the nation’s largest home mortgage lender, for allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans, according to three people with direct knowledge of the probe.

The company, the fourth-largest U.S. bank by assets, is currently embroiled in pre-lawsuit negotiations with the Justice Department in hopes it will settle the accusations and avoid a public lawsuit, these people said.

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Last week, the Fed said that perhaps more than 10,000 borrowers were inappropriately steered into subprime mortgage loans or had their loan documents falsified by bank personnel. Wells Fargo agreed to pay $85 million to settle the civil charges. It did not admit wrongdoing.

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Taken together, the various investigations paint a picture of a lender that profited by knowingly targeting less-sophisticated borrowers, in particular preying upon those communities that traditionally lacked access to a full range of consumer credit products.

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Wells Fargo has fought lawsuits from Baltimore and the city of Memphis alleging that the bank preyed upon black borrowers; settled claims it illegally steered credit-worthy borrowers into subprime loans and misled investors about the risks of mortgage-backed securities it sold; and fought investigations and regulatory actions stemming from revelations that it employed so-called “robo-signers,” the agents directed by lenders to process foreclosure filings en masse without examining the underlying paperwork.

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“We’re a majority African American community, and there are people in this city who take great offense when institutions take advantage of a community’s historical lack of access to credit, and in some cases lack of sophistication, by putting them in loans they can’t afford,” said George Nilson, Baltimore’s city solicitor. “It’s offensive behavior and we shouldn’t tolerate it.”

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  • Uniculturalist

    I can’t say I’m unhappy about this. Wells Fargo is one of the most diversitoid, politically correct companies in the United States. Having dealt with them for a number of years, I’m well aware of their other business practices and I don’t think it could have happened to a nicer bunch of folks, if you know what I mean.

  • Bill R

    “We’re a majority African American community, and there are people in this city who take great offense when institutions take advantage of a community’s historical lack of access to credit, and in some cases lack of sophistication, by putting them in loans they can’t afford,”

    Translation: we in the black community have a historical lack of acceptable credit, in fact we historically have horrible credit, and in some cases we lack any discernible intelligence whatsoever, and are willing to accept loans with any sort of terms because (1) nobody else will give us a loan, and (2) we never had any intention of repaying them anyway, which is why the black community have a historical lack of access to credit.

    Got it? Now lend us MORE money, or we will sue your butts.

    And Eric My People Holder and Mein Obama just smile and nod and enable them all they can.

  • Chally

    I am a mortgage lender and I can testify that if our bank did not lend in those type communities we would be facing heavy pressure from the Feds. Lending is based on risk and the terms of a loan are going to reflect the credit profile of who you are lending to period not their lack of sophistication. This is a bull lawsuit.

  • sbuffalonative

    Wells Fargo should have a paper trail. They should be able to produce letters and memos detailing meetings with government representatives.

    If I were WF, I would be compiling these letters, emails, memos, and notes from meetings and phone conversations and make them public saying, ‘We did what the government wanted and now the government is threatening to punish us for doing what they wanted us to do’.

  • Anonymous

    A simple solution going forward, require all mortgage applicants to take a national proficiency test thereby assuring they understand the nature and consequences of that contract.

    Of course we can expect to learn that blacks have unique needs that can’t be tested with white exams. No exam or question in the exam will be offered as proof other than a large amount of blacks failed the test. The fact that Asians have a higher pass rate than blacks or whites will be ignored as well. The crafty ever devious whites can construct such instruments of discrimination. The passing scores will be lower to assure equality. Too many financially deficient, credit inadequate “minorities” will get bank loans. And the default rate will be in direct proportion to the test scores. The banks’ losses will be made good by tax payers. Sound familiar?

  • E Pluribus Pluribus

    Uniculturalist #1: “I can’t say I’m unhappy about this. Wells Fargo is one of the most diversitoid, politically correct companies in the United States.”

    =======

    Wells Fargo was one of the first, if not THE first, big banks to offer home mortgages to illegal aliens:’

    “In December 2005, Wells Fargo & Co. began extending mortgages to consumers with an ITIN [Individual Tax Identification Number; used to assess taxes on workers who did not have social security numbers].” (Wall Street Journal, Feb. 13, 2007)

    This folly, which helped to inflate the housing bubble was, of course, heartily endorsed by the Washington “regulatory” apparatus. From a 2005 Wall Street Journal report, “Banks Open Doors to News Customers: Illegal Immigrants,” July 8:

    “Competition for new customers is driving banks to offer home loans and other financial services to illegal immigrants — and they are getting help from government agencies, such as the Federal Deposit Insurance Corp. The FDIC encourages banks to lend and invest in underserved markets regardless of customers’ immigration status.”

    ====

    “Underserved markets”? Illegal aliens were being underserved. Our federal government put a stop to that. No more “underserving” illegal aliens.

  • TomSwift

    If they didn’t lend they would be sued for racism wouldn’t they.

  • Rob

    Just proves you can never bend over far enough for the PC Nazi’s.

  • Mr.White

    Whenever you lend money based upon the color of one’s skin and not creditworthiness you’re going to have these problems. It’s inevitable.

    Of course, it gets a whole lot worse when you have a government strongly suggesting loans be given based upon the color of skin and even goes as far as to cover such loans in the event they go bad.

    The fact of the matter is those so called “victims” should have never had access to these loans in the first place. Instead of defaulters, they’re now coined victims of “predatory lending practices,” eligible for “civil” relief. Another golden opportunity to distribute wealth. Whether it’s the black farmer or minority home owners who defaulted on their loan; all are eligible for civil relief under this administration.

    It was a win/win for these deadbeats all along. At the least, they received a home. At best, they became victims, eligible for civil relief.

    Pretty good deal if you can get it….

  • Anonymous

    Didn’t we just hear last week that Eric Holder is going after banks that will not lend to blacks and “other minorities?” It’s starting all over again, and the first one hasn’t even settled out yet!

    This is insane, just insane.

  • Sardonicus

    My father worked in the banking industry in the South Carolina for thirty years. Bankers are only interesting in making money. They don’t care what color you are; only how likely are you to default on your mortgage. My bet is that the minority loan applicants were steered to subprime loans because they had poor credit. Blame the government that forced bankers to loan to customers with poor credit ratings.

  • margaret

    A little something to the Wells fargo website

    We’re committed to building relationships with minority-, woman-, LGBT- , veteran-, disabled- veteran- and/or disabled-owned businesses. In 2009, Wells Fargo spent $590.4 million with diverse-owned and women-owned suppliers.

    Better they should have donated $590 million to a Civil Rights for Whites or 14th amendment for all legal defense law firm to fight affirmative action than grovel to women and minorities.

  • white is right, black is whack

    The above poster is correct. I’m not bad necessarily at the blacks or behave bad or even the illegal immigrants today. They are doing what’s natural to them. I’m mad mostly at the people who enable them. For example, suppose your neighbor’s teenage kid was blaring down the street with their music loud and driving fast. That’s how teenagers act. You should be mad at their parents for enabling them and not taking away their freedoms and privileges when they misbehave.