rssThere’s More to Answer for in the Wells Fargo Subprime Suits
Monday, September 21, 2009 at 10:51 am
- 9 Comments
Now that commentator and PBS talk show host Tavis Smiley has severed his ties to Wells Fargo & Co., what about the bank itself? As Smiley noted in his decision to cut business ties with Wells, the bank is facing several lawsuits charging that it engaged in illegal discriminatory lending practices by allegedly selling high-cost subprime loans primarily to minority borrowers.
The bank has denied all the charges, and has said it will strongly fight the lawsuits.
There’s a lot for the bank to answer to. Here’s a bit more from the suit by Illinois Attorney General Lisa Madigan, regarding the bank’s marketing tactics:
As part of Wells Fargo Home Mortgage’s marketing plan, Wells Fargo Home Mortgage utilized a computer function that purportedly permitted employees to customize Wells Fargo marketing materials to target African Americans by choosing “African American” in a pull down menu of “language” options.
If that’s true, it’s certainly a creative use of language options by the Wells’ marketing people.
And the end result of all these efforts, according to Madigan?
The lawsuit also follows a recent Chicago Reporter analysis of mortgage data submitted by Wells Fargo to the federal government. That study found that, in 2007, Wells Fargo sold high-cost, subprime loans more often to its highest-earning African-American borrowers in Chicago than to its lowest-earning white borrowers. According to the study, in 2007, about 34 percent of African Americans earning $120,000 or more received high cost mortgages from Wells Fargo in the Chicago metro area, while less than 22 percent of white borrowers earning less than $40,000 received high-cost mortgages from the lender.
So … a black borrower making more than $100,000 could be more likely than a white borrower earning, say, $35,000 to get a subprime loan? No wonder the lawsuits against Wells are flying.
The point about the suit in Illinois, and a similar suit filed by the city of Baltimore against Wells, is that all these subprime loans took a huge toll on minority neighborhoods, and devastated the cities themselves. These are dramatic, even unprecedented charges — that a major U.S. lender, a recipient of $25 billion in government bailout money, caused lasting damage to some major American cities by deliberately targeting minority neighborhoods for risky high-cost loans. The cities are suing Wells to recover money to fix the mess that remains in neighborhoods wrecked by foreclosures.
Now Smiley has distanced himself from Wells, and teaming up with the bank for “Wealth Building” seminars won’t be on his agenda again.
But what about the rest of it? If the bank’s lending practices were fair and beyond reproach, as the bank maintains, then what happened? Why are black and Hispanic communities in some cities crumbling under the weight of so many subprime foreclosures?
Smiley may have left the stage. But that still hasn’t answered all the questions regarding Wells Fargo, subprime loans and the broken neighborhoods left behind.
9 Comments
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Comment posted September 21, 2009 @ 4:27 pm
I was in the Real Estate business for years & these claims of minorities being taken advantage of make me laugh. Not because I don't feel bad for the victims of the loans, but because 99.9% of the time these minorities chose to do business with Mortgage brokers of their same race- because of their race. This is the factor that needs to be investigated more deeply before posting stories of how they were treated poorly by the bank establishments at a higher level. The Mortgage Brokers originated the terms of the loan, not the banks. The Banks only approve or deny these terms.
The most outrageous loan terms that I saw were loans originated by Latins to Latins, Haitians to Haitians, African Americans to African Americans etc. This is not to say whites didn't rip off whites, but is was more prevalent with minorities because finance is not as prevalent to the masses in many of the victims home countries & therefore they were not as familiar with the finance process as many of those originally from the US. In short, these minorities were victims of blindly placing their faith in Mortgage brokers based on their common race.
Another fact that is largely overlooked on this topic is the fact that the current financial crisis wasn't entirely due to defaulted loans to low income clients, but rather the larger number of defaulted loans were to high income investors who got caught up in the desire to make quick cash flipping existing homes or pre-construction homes & condos. The loan may have stated the property was their primary residence, but in many cases these were outright lies by both the mortgage broker & the client in order to obtain a lower interest rate.
Mortgage brokers are not required to follow a code of ethics even remotely close to what Real Estate Agents are (at least not in FL), this desperately needs to change.
Comment posted September 21, 2009 @ 5:33 pm
I don't remember reading about a Mortgage Company putting a gun to someone's head and making them sign documents. Last time I checked you have the right to go somewhere else if you feel that you could get a better price.
Let's buy a gallon of milk from Target and then sue them because we could have bought it for .50 cheaper at Walmart.
What has this world come to?
Comment posted September 22, 2009 @ 12:38 pm
Ultimately, the mortgage broker becomes irrelevant once the underwriting process begins. At that point, it's the bank that's at fault for (a) approving, (b) funding, and (c) servicing high-risk loans.
Comment posted September 22, 2009 @ 1:42 pm
Wells Fargo's problems are far from over !
Visit — HurtingHomeOwners com
Comment posted September 24, 2009 @ 3:23 am
Mortgage brokers are NOT irrelevant when it comes to the amount of interest paid on the loan, which is the underlying topic of the above article- Minorities paying more than whites on loans. Mortgage brokers increase the cost of the loan, by adding points to the loans, in order to obtain the highest possible fee- thus making themselves more money on that single loan deal. The customer has the option of walking away but many didn't assuming they were being given the best deal by the mortgage broker they were dealing with.
Comment posted September 25, 2009 @ 5:57 am
OPEN LETTER TO PRESIDENT OBAMA:
re: Disregarding Blatant Proof of Wells Fargo’s Egregious Deceptive Practices Could Result In A Worse-Than-Madoff Situation
Mr. President:
PLEASE launch probes into self-evident false IRS form 1099-A's connected with foreclosures.
A mere look at Wells Fargo's false 1099-A's will expose various White Collar real estate & foreclosure fraud (carried out for years)–likely, another S&L mess! Further, the most recent controversy about former Wells Fargo (WF) senior vice president, Cheronda Guyton’s use of the Miami home which the owners lost as a result of Bernie Madoff, is actually an unwitting exposition of deceits associated with foreclosure and repossessions. Moreover, Wells Fargo’s internal investigation into that Miami matter has glaring appearances of coverup –particularly because WF implausibly announced Ms. Guyton acted solely when it fired only her.
The point I want to make is that non-legal foreclosures filed DELIBERATELY in courtrooms are for reasons such as: filing false Internal Revenue form 1099-A's for tax advantages; repeated property flipping (which leads to blighted neighborhoods); and Bankruptcy Court false motions to “Lift Stay” for purposes of achieving SIMULATED AUCTIONS. As such, loan modification is not in the interest of these sort of lenders. Ongoing news reports of court judges who dismiss foreclosure cases because of no proof of owning notes is not always a coincidence, or mistake.
Deliberately false foreclosures often name defunct mortgage companies or companies which no longer hold the notes, and contain illegally affixed fees in excess of “Acceleration Clauses,” which makes it even harder for people to re-pay arrears. If property owners sue for “Unfair Debt Collection Practices,” attorneys make more even $$$ through protracted litigations –which Wall Street Investors often incur the tab. In some instances, through use of a false mortgage holder’s name, the debt collection lawyer actually is the disguised foreclosing plaintiff who wounds up with ownership of foreclosed property and flips it!
The reality is that SCORES of foreclosure cases -including some of Wells Fargo’s have been thrown out of court when lenders (via collection lawyers) file foreclosure or Bankruptcy court proceedings without proof of being the proper party in interest. Accordingly, as it pertains to the minuscule information supplied by WF after embarrassment by its former vice president squatting and partying in the Miami home; and in light of irrefutable foreclosure frauds, here are some blatant questions about foreclosures, as well as that home squatting incident for which Wells Fargo dismissed our intelligent ability to contemplate:
1. Undeniably, the Elin property had not yet been put on the market for public sale. How or why then, did ––according Ms. Guyton’s public statement– Collin Equities wind up owning that Miami home after the Elins signed it property over to Wells Fargo?
2. Could it be that (in like manner as Wells Fargo does here in Louisiana) Collin Equities was the straw buyer for the Elins property, or did some sort of “simulated sale” occur whereby the property deed became (unlawfully) CONVEYED to Collin?
3. Considering Guyton’s brass to use that Miami home, and her reference to Collin Equities, could there have been kickbacks / quid pro quo activity between them or any other firm of which Guyton oversaw property ownership transfers?
4. Since Ms. Guyton was “responsible for commercial foreclosed properties,” wouldn’t it be the role of the person who is in charge of Residential foreclosed properties to permit Guyton to have access to the Elin property? On the other hand, if the property is under Collin Equities ownership, did Collin permit Guyton’s personal use of that home?
5. If Guyton had no authority over residences such as the Elin home, but Guyton’s authority was commercial property, does that not demonstrate that Wells Fargo’s investigation was not truthful; and that persons in the residential properties department were actually tangled with Guyton’s actions?
6. What percentage of reasonable thinking people can honestly believe that WF employees do not make personal use of other repossessed properties as long as no exposure and public outrage occurs?
7. How many people are unlawfully homeless, unlawfully evicted due to null foreclosure filings, or due to Bankruptcy Court “Lift Stay” motions that have been filed in the name of a lender which does not own the note, or a defunct lender?
8. If courtroom judges simply give collection attorneys carte blanche approval to seize and sell [defaulted] property without judges bothering to determine whether the named mortgage company has lawful right to the property, how probable is it for an unscrupulous lawyer to use any company’s name to seize someone’s home?
9. How many lawyers (via straw buyers) wind up with those distressed properties until they flip them!?
10. When mortgage companies receive form 1099-A tax advantages from the Internal Revenue; and when mortgage companies continually flip property while at the same time gain negotiable security for the same property, what incentive is there for such lenders to bother about blighted neighborhoods?
11. Lastly, aside from the gust of foreclosures that were dismissed from courts, what untold numbers of people who lack legal knowledge or lack means to pay for legal representation have lost or will loose their homes unlawfully?
The seriousness of the above information is more than ample reasons why I respectfully ask you, Mr. President, to compel Congress to conduct a massive investigation of Wells Fargo (which will shed much light on many aspects of lender frauds), and refrain from blindly accepting Wells Fargo’s own spin of the truth. Please feel free to make use of the facts, court pleadings, transcripts, and other prima facie evidence posted on my website. Moreover, there is more available evidence I have not made public of which, I will be pleased to provide when my safety is certain. Here are 2 links from my website:
http://www.lawgrace.org/2008/08/08/my-august-8-…
http://www.lawgrace.org/2008/09/14/lehman-broth…
Barbara Ann Jackson
Law & Grace, Inc
Comment posted September 27, 2009 @ 2:43 am
I am the author of the “Open Letter to President Obama.”
I am positive about the Wells Fargo / Cheronda Guyton matter taking place in Malibu; and that the property was even referred to as “Malibu Colony properties.” (Unfortunately, I’m not a good proofreader, nor, thanks to mortgage fraud, can I afford one.) I am aware that real estate agent Irene Dazaan-Palmer wanted show the lender-reclaimed Malibu property of Lawrence and Linda Elins. I simply mistyped the word Miami instead of Malibu, and never even realized I had done so.
However, I feel certain it is clear to any reader that the identities as well as the incident about which I wrote were in fact the people in Malibu.
ALSO, I am not a lawyer, I am simply someone who uses her time, money, and resources to do what I can to help people to whom blogs such as these are intended. Thanks for calling attention to my Miami / Malibu error. -Barbara
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