Loan officers at Wells Fargo Bank steered minorities into subprime loans even though they qualified for cheaper conventional loans, the New York Times reported June 6. Loan officers also made openly racist statements at work, former colleagues charged, calling minorities "mud people" who got "ghetto loans" because they don't pay their bills and have bad credit. The revelations came as part of a predatory lending lawsuit filed by the city of Baltimore against Wells Fargo, alleging that the lender's practices resulted in a staggering rate of foreclosures that left homes across the city vacant, especially in predominantly African American neighborhoods, and cost the city tens of millions in services and taxes.
According to the Times, loan officer Beth Jacobson testified that Wells Fargo systematically targeted black customers for subprime loans. This practice, known as "reverse redlining," is a problem for customers because subprime loans have a higher interest rate than traditional mortgage loans. As the Times noted, a difference of just 3% in interest rates translates to $100,000 more in interest payments. Another former loan officer, Tony Paschal, told the court that loan officers earned bonuses for steering customers who qualified for a prime loan to the subprime division. To achieve that, Jacobson testified, loan officer falsified documents and lied about clients' willingness to document their income.
We have already written a bit about reverse redlining after the NAACP lawsuit accusing Wells Fargo and other banks of similar behaviors. While the racist comments are appalling and possibly evidence of illegal behavior, our Riverside County predatory lending lawyers are also concerned about the financial side of the case. People of any color are vulnerable to manipulation by lenders if they are not familiar with the mortgage lending process -- and most people are not. If the allegations are true, these loan officers took advantage of that lack of familiarity, and the lack of regulations requiring full disclosure, to essentially cheat their clients. As a result, clients took on hundreds of thousands of dollars in unnecessary debt, leading in many cases to foreclosures that hurt them, their neighbors and the economy as a whole.
Howard Law LLP helps people who were entrapped by an unscrupulous lender demand justice through Southern California predatory lending lawsuits. Numerous state and federal laws require that lenders fully disclose the terms of loans, treat borrowers of all races fairly and otherwise refrain from unfair or manipulative behavior. If they do not, victims can sue to have the loans declared unenforceable and win back every payment they made on the unfair loans, interest, closing costs and even attorney fees. Our Monterey Park predatory lending attorneys have successfully stopped foreclosures, modified mortgage loans and released clients from onerous financial obligations they would never have agreed to if the lender had been honest.
If you believe you were misled when you took out your loan or refinanced and you're facing serious financial problems as a result, Howard Law can help. To set up a free, confidential consultation, please contact us as soon as possible via email or call toll-free at 1-800-872-5925.