The city of Baltimore is suing Wells Fargo for systematically singling out African Americans as targets for subprime loans.
Wells Fargo was accused of systematically selling subprime mortgages to minorities in a federal lawsuit filed by the city of Baltimore. A lawsuit is also being filed by the NAACP, and Illinois and New York are among the states looking into more filings. In Baltimore, more than half the Wells Fargo properties that went into foreclosure currently stand vacant, and 71% are in African American neighborhoods. In New York City, black households making over $68,000 with a Wells Fargo mortgage were 8 times more likely to have a subprime mortgage as white households in the same bracket.
Filings in the suit include affadavits by two former loan officers attesting that they were offered bonuses to sell subprime mortgages to candidates who would have otherwise qualified for a conventional mortgage and that they targeted minority homeowners for the mortgages. Some of the more egregious claims include that some loan officers withheld client’s employment information so that they would not qualify for a conventional loan or cut and pasted credit reports from one customer into another’s application. Another loan officer talks about the teams set up to market the mortgages to African American churches.
While the judge is still waiting on more information from the city of Baltimore to determine if the lawsuit should proceed, it nonetheless remains disconcerting that a company such as Wells Fargo could engage in this kind of behavior for so long withoout anyone noticing it until now. It sounds like these practices were engaged in at a widespread level for long periods of time. Why didn’t anyone say anything until so many years later?
It is hard to conceive of anything that could be done to make up for the level of discrimination that took place and the harm done, should the lawsuit be allowed to proceed and Wells Fargo found guilty. Cases like this one are nonetheless a good reminder of the importance of educating consumers on financial products– hopefully if people learn about mortgages, insurance products, and/or reverse mortgages, for example, they will be less likely to fall victim to scams or unfair deals.