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Jury Awards $3.5 Million in Lawsuit Alleging Racial Discrimination by Wells Fargo

March 31, 2011

Our Riverside County predatory lending attorneys have written in the past about lawsuits accusing lenders of a practice called "reverse redlining." The redlining familiar to students of U.S. history made it impossible or very difficult for buyers from racial minorities to buy homes in neighborhoods considered "white." Reverse redlining, by contrast, steers minority buyers into higher-priced loans and neighborhoods considered appropriate for their racial backgrounds. In late 2009, a Los Angeles court certified a class-action lawsuit from borrowers who claim they were victims of reverse redlining by Wells Fargo Bank. On March 23, a Los Angeles jury found the bank guilty and awarded $3.5 million to be split among 880 borrowers.

In their lawsuit, the plaintiffs accused Wells Fargo of intentionally guiding borrowers toward loans that were more expensive than necessary. Starting in 2002, the bank had a computer program called Loan Economics that reportedly allowed loan officers to offer discounts to qualifying borrowers. However, they claimed branches in minority neighborhoods were not allowed to use the software, even when loan officers requested it. As a result, people in those neighborhoods paid more in interest and fees than similar buyers in whiter areas. The lawsuit is not the first accusing Wells Fargo of reverse redlining; suits have been filed in Tennessee, Maryland and Illinois, with the Tennessee suit supported by statements from former employees accusing Wells Fargo of the practice.

As Norwalk predatory lending lawyers, we're disappointed but not surprised by the allegations against Wells Fargo. During the housing boom and bubble, lenders saw easy money in a variety of places, including minority communities. In fact, studies found that subprime loans -- which are now considered one of the causes of the original housing bust -- were disproportionately made to Latino and African American borrowers. The history of discrimination against those communities is part of why we now have several state and federal laws against discrimination in lending and housing, including the federal Fair Housing Act and Community Reinvestment Act. Here in California, we also have a state law requiring loan contracts to be drafted in the same language used to negotiate them, an attempt to fight deception of people without strong English.

At Howard Law PC, we fight these and other types of predatory lending vigorously, by suing the institution responsible for discrimination, deception or fraud. In some predatory lending cases, we can have the loan canceled altogether and converted to one with terms that are not exploitive. We also file predatory lending cases against mortgage loan servicers that have consistently refused to treat borrowers fairly after they've gone into default or tried to get their loans modified. Whether or not those actions have to do with race, our Santa Ana predatory lending attorneys sue to stop them, getting clients the fair consideration they deserve -- and, when necessary, stopping an unfair foreclosure even if it's scheduled to take place very soon.

If you believe your lender intentionally deceived you, applied unfair standards to your loan or never intended to seriously consider your loan modification, don't wait to call Howard Law for help. For a free, confidential case evaluation, you can reach us online or call us toll-free at 1-800-872-5925 today.