Wells Fargo accused of preying on black and Latino homebuyers in California

Wells Fargo discriminated against black and Latino homebuyers in Sacramento, California, by pushing them into more ex...

Posted: Feb 27, 2018 8:14 PM
Updated: Feb 27, 2018 8:14 PM

Wells Fargo discriminated against black and Latino homebuyers in Sacramento, California, by pushing them into more expensive mortgages than white borrowers, according to a federal lawsuit that cites former employees.

The city of Sacramento accused Wells Fargo of a "long-standing pattern and practice" of illegal lending in minority and low-income communities that reduced home values, limited property tax revenue and drove up foreclosures.

"Wells Fargo's discriminatory lending practices place vulnerable, underserved borrowers in loans they cannot afford," said the lawsuit, which was filed Friday.

The city said that four anonymous former mortgage employees at Wells Fargo confirm that the bank "intentionally steered minority borrowers into higher cost loans because of their race or ethnicity."

Black Wells Fargo borrowers in Sacramento with credit scores above 660 are 2.8 times more likely to receive a high-cost or high-risk loan than comparable white borrowers, the lawsuit said. Latino borrowers were 1.8 times more likely, the suit said.

The lawsuit comes just weeks after the Federal Reserve rocked Wells Fargo with an unprecedented punishment for "widespread consumer abuses," including the infamous fake account scandal. The tough sanctions prevent Wells Fargo from growing until the Fed believes the bank has cleaned up its act.

Related: Wells Fargo's 17-month nightmare

The latest black eye for Wells Fargo hits close to home. Sacramento is the capital of California, Wells Fargo's home state for the past 166 years. Now the city is seeking undisclosed monetary damages to recover "significant" injuries it claims Wells Fargo inflicted.

Wells Fargo said in a statement that Sacramento's allegations "do not reflect how we operate in the communities we serve" and that the bank plans to "vigorously defend" its lending record.

"We deeply value our relationship with Sacramento," the bank said, "and are working diligently and consistently with customers, credit counselors, non-profit organizations and government agencies to expand homeownership across the credit spectrum."

Sacramento is not the first city to point the finger at Wells Fargo.

Last year, Philadelphia filed a similar lawsuit, citing former employees who alleged the bank encouraged workers to push the use of higher-cost loans to minorities. Baltimore and Miami have also accused Wells Fargo of discriminatory mortgage lending.

Sacramento argued that Wells Fargo has a long history of steering minority borrowers into mortgages that had higher costs and were riskier than more favorable loans provided to similarly situated white borrowers.

Related: Trump may weaken rules that force banks to lend to the poor

The lawsuit cited confidential witnesses who previously made or underwrote mortgages in Sacramento for Wells Fargo.

The former Wells Fargo employees said they were instructed to offer "lender credits" to borrowers in minority neighborhoods. These credits increase the cost of a loan in exchange for the bank paying closing costs, making the overall cost of the mortgage more expensive.

One of the former Wells Fargo workers said in the lawsuit that he was not required to explain to borrowers that their higher interest rate would last beyond the point that the closing costs were repaid.

Wells Fargo loan officers were likely to charge a higher rate to borrowers with Mexican names, another former bank employee said in the lawsuit.

The lawsuit also claimed that Wells Fargo took advantage of the language barrier with Spanish-speaking borrowers. It quoted a former employee who said that while Wells Fargo advertised for mortgages in Spanish, it did not produce translated paperwork to sign - even when the transaction was handled in Spanish.

"Wells Fargo deliberately created an incentive program that induced minority borrowers to take higher cost loans under terms that they did not understand," the lawsuit said.

The city also accused Wells Fargo of "refusing to extend credit to minority borrowers" who wanted to refinance their more expensive mortgages.

Sacramento argued that Wells Fargo's misconduct "directly caused an excessive and disproportionately high number of foreclosures."

Huntsville
Clear
74° wxIcon
Hi: 91° Lo: 68°
Feels Like: 74°
Florence
Clear
71° wxIcon
Hi: 92° Lo: 69°
Feels Like: 71°
Fayetteville
Clear
75° wxIcon
Hi: 91° Lo: 66°
Feels Like: 75°
Decatur
Clear
72° wxIcon
Hi: 88° Lo: 67°
Feels Like: 72°
Scottsboro
Broken Clouds
73° wxIcon
Hi: 87° Lo: 69°
Feels Like: 73°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Confirmed Cases: 56441

Reported Deaths: 1136
CountyConfirmedDeaths
Jefferson7012170
Mobile5061140
Montgomery4599112
Tuscaloosa274353
Madison25359
Marshall205012
Shelby176425
Lee164737
Morgan13975
Baldwin134111
Walker111332
Elmore107622
Etowah106914
Dallas10189
DeKalb10017
Franklin95016
Unassigned77728
Autauga71515
Russell7130
Chambers68530
Cullman6686
Limestone6653
Butler65529
Houston6417
Tallapoosa63069
Lauderdale6006
St. Clair5983
Calhoun5545
Colbert5286
Escambia5128
Lowndes49222
Pike4805
Jackson4422
Coffee4364
Covington43512
Talladega4177
Dale4061
Barbour4022
Bullock37810
Hale36323
Marengo36111
Chilton3452
Blount3311
Clarke3236
Wilcox3158
Marion30914
Winston3095
Sumter29713
Pickens2786
Randolph2759
Monroe2683
Perry2552
Conecuh2388
Bibb2271
Macon2229
Choctaw22012
Greene2009
Henry1573
Washington1529
Lawrence1460
Crenshaw1343
Cherokee1317
Geneva1010
Fayette901
Clay892
Lamar891
Coosa671
Cleburne481
Out of AL00

Tennessee Coronavirus Cases

Confirmed Cases: 65274

Reported Deaths: 749
CountyConfirmedDeaths
Shelby14163224
Davidson13976146
Rutherford375539
Hamilton353538
Sumner204056
Williamson193916
Knox171710
Out of TN166012
Trousdale15105
Wilson126117
Putnam10817
Unassigned10772
Bradley10104
Robertson97313
Sevier9244
Montgomery8247
Tipton7177
Lake6960
Macon6467
Bledsoe6311
Bedford6309
Hamblen5084
Maury4993
Hardeman4444
Madison3842
Fayette3805
Rhea3500
Blount3483
Loudon3312
Dyer3023
McMinn29319
Cheatham2873
Dickson2820
Washington2760
Lawrence2506
Sullivan2485
Cumberland2294
Anderson2112
Gibson2031
Jefferson1931
Lauderdale1934
Smith1852
Warren1590
Greene1572
Monroe1566
Coffee1520
Cocke1460
Haywood1413
Hardin1407
Obion1273
Marshall1232
Wayne1230
Franklin1223
Giles1221
McNairy1171
Hickman1120
Carter1082
Marion1014
DeKalb990
Hawkins952
Lincoln950
White933
Roane880
Henderson830
Chester810
Overton791
Weakley791
Claiborne760
Campbell721
Grundy672
Crockett653
Unicoi600
Grainger590
Cannon580
Carroll571
Polk570
Henry540
Sequatchie520
Jackson500
Johnson490
Humphreys482
Perry430
Meigs400
Decatur350
Morgan341
Fentress290
Scott290
Union280
Stewart270
Clay230
Houston230
Moore230
Benton161
Hancock120
Lewis120
Van Buren90
Pickett80

 

 

Community Events