Yet more proof of discrimination in lending-when will something be done
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Posted By: Marquerite Burgess on June 04, 2009 Ex-Employees Claim Racism in Wells Fargo Subprime Loan Push: New Affidavits Filed in City's Lawsuit by The Baltimore Sun, Maryland - 2009-06-04 By Tricia Bishop, The Baltimore Sun Jun. 4--Wells Fargo loan officers guided minorities toward high-rate mortgages and joked that they were "riding the stagecoach to hell" for routinely steering prime-loan-qualified customers toward subprime loans, according to sworn declarations by two former employees, filed in federal court this week. The affidavits were offered as evidence in a lawsuit filed on behalf of Baltimore last year and amended Monday, alleging "tens of millions" of dollars in losses from racist, predatory lending, known as "reverse redlining"- the targeting of minority borrowers, regardless of credit history, for unfavorable subprime loans. The city says the practice led to increased foreclosures, vacant properties and crime in black communities. "Our minority residents and homeowners, many of whom were first-time buyers, were led down a disastrous primrose path by Wells Fargo, one of the biggest lenders in the city of Baltimore," City Solicitor George Nilson said in an interview Wednesday."We're trying to do what we can to get some kind of redress." In an 825-page amended complaint filed Monday, city attorneys attached 20 exhibits, including the employee declarations, 10 studies about reverse redlining and statements from Baltimore residents about the problems of living near foreclosed-upon, vacant homes. They also filed a motion asking that a hearing scheduled for later this month, to determine whether their suit holds water, be "reconsidered" based on the information. But after a conference call Wednesday, U.S. District Court Judge Benson E. Legg denied the motion and put parameters on the June 29 hearing. Each side will get two hours to present information, then, after a short break, the judge will rule on whether the case will go forward or be dismissed, Nilson said. Legg did not return a call from The Baltimore Sun. Wells Fargo has vehemently denied the allegations and accused Baltimore of being so "thirsty for revenue" that it has to sue companies. In an e-mailed statement, spokesman Kevin Waetke said the lawsuit "absolutely lacks merit" and that the company is not to blame for the city's foreclosures or any of its "many broad problems" affecting the housing market. "We have worked extremely hard to make homeownership possible for more African-American borrowers and for all customer segments, and we have done so fairly and responsibly," Waetke wrote. "We absolutely do not tolerate team members treating our customers or others disrespectfully or unfairly, or who violate our ethics and lending policies. We have principles, systems and processes team members must follow that ensure race is never a factor in the pricing or products we offer." He declined to comment on the specifics, including the declarations, which contradict the company's policies. Former loan officer Tony Paschal said Wells Fargo targeted black communities for bad loans by focusing on African-American churches, using black employees as its public face, and using software to translate marketing materials into various languages, including something called "African American." He also said that other employees called subprime loans in predominantly minority neighborhoods "ghetto loans" and used racial slurs, including "mud people." Paschal, who worked for the bank between 1997 and 2007 with a two-year hiatus beginning in 1999, is African-American. He claims he wasn't promoted because of his race and because he wasn't pushing subprime loans as hard as his colleagues. Another former bank employee, Elizabeth Jacobson, a top Wells Fargo subprime loan officer, outlined techniques she and others used to turn prime borrowers into subprime borrowers, including talking them into borrowing the full amount even if they could afford a large down payment. Nilson said others have come forward with similar stories, and he expects to present their claims if the lawsuit is allowed to continue. "The case really can't move until we get past this current logjam of getting the court to decide this motion to dismiss," he said. The lawsuit, filed in January last year, was among the first in what's now a wave of similar suits cropping up in states across the country, including Texas, Tennessee and California, where earlier this year, a federal court judge allowed the National Association for the Advancement of Colored People to pursue its lawsuit against nearly two dozen mortgage lenders. Excerpts from former Wells Fargo loan officer declarations filed in federal court this week: Elizabeth Jacobson, a loan officer turned sales manager from 1998 through 2007: -- Prime loan officers steered customers to subprime loans by telling them "that this was the only way for the loan to be processed quickly; that there would be less paperwork or documentation requirements, or that they may not have to put any money down." -- "Some A reps [prime rate loan officers] actually falsified the loan applications in order to steer prime borrowers to subprime loan officers." Tony Paschal, a loan officer from 1997 through 2007 (minus two years spent on hiatus): -- "Wells Fargo also discriminated against minority loan applicants by advising them that the interest rate on their loan was 'locked,' when in fact, Wells Fargo had the ability to lower the interest rate for the applicant if the market rates dropped prior to the loan closing." -- "I also heard [Mortgage Resource division] employees on several occasions mimic and make fun of their minority customers by using racial slurs. They referred to subprime loans made in minority communities as 'ghetto loans' and minority customers as ... 'mud people.' " ----- To see more of The Baltimore Sun, or to subscribe to the newspaper, go to http://www.baltimoresun.com. Copyright (c) 2009, The Baltimore Sun Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. If you enjoyed this article, Join HBCU CONNECT today for similar content and opportunities via email! |
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Marquerite Burgess
President/CEO, MCB Processing and Marketing Services, LLC Rutgers Univ-Camden class of 2008 Member Since July 2008 |
Comments
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They are owned by BOA now. It is actual states that are suing this company, but the borrowers should have their loans redone at the terms of which they should have been in the first place for those that are not in foreclosure, but the ones that are. You darn tooting, they would have to produce the note for me, in fact all of the original documentation pertaining to the loan.
Thursday, June 4th 2009 at 8:13PM |
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My point exactly, Mr. Brown, "purchasing a house is not difficult to read and comprehend". It's as if a person can tell Black folk anything and they fall for it hook, line and sinker. I mean, come on, a little due diligence and understanding can go a long way in life! I dated this young lady once who gave the salesman pure hell when negotiating a car deal. She wouldn't sign until she got everything on her terms: no money down, low interest (she had excellent credit, BTW), add-ons, etc., etc.; the salesman nearly pulled his hair out, so how are these people so easily hoarded on a stagecoach to hell? I believe this w/all my understanding: Blacks are the most gullible people on the planet. They'll fall for anything.
Friday, June 5th 2009 at 10:31AM |
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I agree with you both totally about reading the documents, but that is not what this is about. This is about a companies practice of steering clients into loans with unfavorable terms and if a person is a first time home buyer, all of the reading in the world would not change the fact that a company places them in a loan with a rate that is favorable to them. Are or have either of you been in the mortgage loan business? An Craig, I did the same thing to a car sales men before, in fact he was so impressed he took me and my best friend to dinner.
Friday, June 5th 2009 at 11:52AM |
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No, I have never been in the mortgage loan business. But I do have a mortgage. And have had one since 1996. I'm not homeless due to foreclosure, high interest rates, or any other kind of hoodwink. This just goes to show how uneducated we have become as a race of people. I'll bet none of those hoodwinked were Middle Eastern Indian, Chinese or White. Only Blacks and Hispanics are too lazy to bother to read and learn. That may sound offensive but it is what it is. I love my people but hate how many of us are. I don't care about the mortgage industry -- they're in it to win it -- it's up to US to be as wise or wiser. I'm out on this subject.
Friday, June 5th 2009 at 1:03PM |
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I have for the past 15 years and have had to call a many of institutions on their BS including the redlining which occurs more often than not. Did you know that your zip code alone would cause you to have higher insurance rates, that is just one example, area with a high rate of minorities are the targeted people, not just in the mortgage industry but in all lending institutions, credit, cars and the like. So to make the assumption that this has to do with the lack of reading documents is not the case at all, as I stated before. It is a strategic practice that has been in place for centuries and since you are an advocate of our people knowing better to be wise or wiser than realize that you are still being hoodwinked by a system that unless challenged on a level beyond just reading a document it will remain in place. Do your research first and then get back to me. Because I have been exposing these practices for years and challenging each on a case by case practice.
Friday, June 5th 2009 at 1:19PM |
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Good response. You are correct, they absolutely base rates by the zip code. But then that leads to a deeper conversation: why is crime higher among Blacks and Hispanics? If we weren't so damned inclined to steal, fight and kill, this wouldn't be necessary. But, that beyond a whole different conversation. I have stated before that stereotypes are based on facts -- otherwise they wouldn't be stereotypical. We are our own worst enemy.
Friday, June 5th 2009 at 1:36PM |
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Stick to this topic, I will say only one thing: the zip code has nothing to do with what your implying about the deeper conversation and if you choose to blog about those issues, we can have dialogue on that and I would more than happy to join in on that.
Friday, June 5th 2009 at 1:45PM |
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Mr. Clark I totally agree with you from that perspective, but once again this article is not about that. I could go into what your saying in another blog if you would like to have a discussing on it from that perspective. I'm not sure if you read any of my responses, but this goes way beyond the consumer, this is about a common practice and unwritten policy that goes on in all areas of lending, not those just pertaining to the mortgage industry. Friday, June 5th 2009 at 2:11PM |
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This story reminds me of the same kinda madness they're doing here in New Orleans with FEMA delivering eviction notices to Katrina victims still living in trailers. In New Orleans during Hurricane Katrina the levees were destroyed just to get Blacks out of the city. And they did it to save the French Quarter subdivision, which as we all know, and EVERYONE from the 504 (with common sense) knows, is predominantly White. I live in the 9th ward, the French Quarter is now the richest subdivision in New Orleans, where did all that money for rebuilding the 9th ward go? I left the day before the storm, that morning, I have neighbors and relatives that rode out the storm who will swear on a stack of Bibles and Korans that they heard an explosion. The government destroyed those levees the same way everything else is destroyed. The fall of the economy, the California wildfires, all this was done to destroy Black people. It's no longer divide and conquer, it's DIVIDE and CONFUSE. Where in the hell are the Jesse Jackson's and Al Sharptons ( we only see them on TV when there's a racist crime), write these entertainers and athletes and let them know that they should get off their a**es and invest in these cities across America. I can go on and on but I must stop here because these things pisses me off. That is why I say in the immortal words of Reverend Wright, "NO, NO, NO, Not God Bless America, God Damn America". because they're the main ones that tried to destroy us in the first place. Friday, June 5th 2009 at 2:16PM |
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