Wells Fargo settles over its sub-prime racism

[CountDeMoney]

Naturally, I expect all of you GOPtards and Big Bigness defenders to blame all dem ol' black folk;  after all, if it wasn't for all those damned dirty minorities, we wouldn't have had a subprime mortgage crisis in the first place. 

Predatory lenders wouldn't be predatory if home buyers didn't wear such skimpy skirts, being all dick teases and just asking for trouble.

Wells Fargo agrees to pay $175M settlement in pricing discrimination suit
Settlement calls for payments of $7.5 million to city of Baltimore, $2.5 million directly to 1,000 area residents

About 1,000 Baltimore-area residents are expected to receive thousands of dollars each under a landmark $175 million settlement between the U.S. Department of Justice and Wells Fargo over accusations of discriminatory lending practices.

Under the terms of the deal announced Thursday, Wells Fargo also will provide $7.5 million to the city of Baltimore, which federal officials credited with first raising issues of discrimination related to bank's subprime mortgages.

The city alleged Wells Fargo steered minorities into subprime loans, gave them less favorable rates than white borrowers and foreclosed on hundreds of Baltimore homes, creating blight and higher public safety costs. Wells Fargo is the largest residential home mortgage originator in the United States.

"Baltimore got the ball rolling," said Assistant Attorney General Thomas E. Perez, who heads the Department of Justice's civil rights division. "The federal government heard you and the federal government followed up."

The deal is the second largest fair-lending settlement in the department's history, said Perez, a former Maryland labor secretary.

The settlement provides $125 million in payments to borrowers, including an estimated $2.5 million in the Baltimore area. Minority borrowers who were steered into subprime mortgages will receive an average payment of $15,000 each, Perez said. Blacks and Hispanics who paid higher fees and rates than white borrowers because of their race or national origin will receive smaller payments that will be determined based on what they were charged.

As part of the agreement, Wells Fargo will pay for an independent administrator to find and compensate more than 30,000 residents nationwide affected by the bank's lending practices.

To address concerns about blight, Wells Fargo also will provide $50 million in direct down-payment assistance to borrowers in Baltimore and seven other communities nationwide that were hit hard by the housing crisis and where federal officials identified large numbers of discrimination victims.

"This practice caused harm to families, neighborhoods and the city's tax base," Mayor Stephanie Rawlings-Blake said. "The agreement puts to rest our legal challenges and allows us to move forward collaboratively and work on growing the city."

Mike Heid, president of Wells Fargo Home Mortgage, said in a statement that his company was "settling this matter ... to avoid a long and costly legal fight, and to instead devote our resources to continuing to contribute to the country's housing recovery."

The bank said it stopped making subprime loans through independent mortgage brokers in 2007 and stopped all subprime home lending in 2008.

Even though the bank agreed to settle the suit, Wells Fargo spokesman Oscar Suris said it still rejects claims that it engaged in discriminatory practices. "The value in settling to us is to get this behind us," he said.

Wells Fargo brought in more than $80 billion in revenue last year and nearly $16 billion in profit.

The Justice Department's lawsuit alleged the bank discriminated against African-American and Latino borrowers between 2004 and 2009. The federal government said that black and Hispanic residents were more likely to be placed in a subprime loan than their white counterparts even if they qualified for a better loan.

"That's called discrimination with a smile," Perez said.

At a news conference at City Hall, he told a story about an "80-year-old African-American resident of the Baltimore area with a 714 credit score and a rock-solid credit file who received a subprime loan instead of a prime loan, and who was not told that she may have qualified for a prime loan with better terms."

"By the time she realized she had an adjustable-rate mortgage, and not the fixed rate she thought, it was too late," Perez said. "The damage was done."

U.S. Sen. Ben Cardin and Rep. Elijah E. Cummings released statements hailing the settlement.

Wells Fargo said it agreed to pay $4.5 million to Baltimore for down-payment assistance, and will grant the city $3 million in additional funds for foreclosure-related initiatives.

Wells Fargo also set a five-year goal of lending $425 million for mortgages in Baltimore, an amount city officials called an increase over current lending levels. This commitment includes $125 million in loans for low- and moderate-income residents.

City Solicitor George Nilson said Baltimore will receive the $3 million payment next month, but officials have not yet determined how to use it. Officials said the $4.5 million will be administered by a not-yet-selected nonprofit. They said the program will be launched in late 2012 or 2013.

"This will greatly assist those looking to buy a home," Rawlings-Blake said.

The settlement covers borrowers who obtained mortgages through brokers, rather than directly from the bank. Wells Fargo agreed to conduct an internal review of its retail lending and compensate African-American and Hispanic borrowers who were placed into subprime loans when similarly qualified white borrowers received prime loans, which offer better rates.

Payments to any retail borrowers identified in the review process will be in addition to the $125 million to compensate borrowers who were victims of discrimination, the federal government said.

Perez, a former Montgomery County councilman, said he believed some Baltimore residents would qualify for payments under this review as well.

Baltimore first filed suit against the bank in 2008 but was forced to refile three times after Wells Fargo won a series of court victories. The fourth version of the city's lawsuit was filed in 2010 and identified more than 250 properties as blighted houses that fell into disrepair because of unnecessary foreclosures that resulted from dishonest loans. At the time, Nilson said the value of damages sought by the city would approach $20 million.

Under the terms of the deal, Baltimore's suit against Wells Fargo will be dismissed.

Perez said the settlement of the federal suit, which also includes payouts to Washington, Chicago, Philadelphia, San Francisco, New York, Cleveland and Riverside, Calif. —all hit hard by the foreclosure crisis — recognizes that foreclosures hurt communities as well as individuals.

"It all started here in Baltimore City," Perez said. "The lawsuit filed by Baltimore City in 2008 was the catalytic force, plain and simple. When you filed this lawsuit to call attention to the devastating consequences of this crisis, you got the attention of the federal government and you got the attention of the nation."

[Neil]

So they 'qualified' for a better loan, but then they didn't pay their loan and got foreclosed on.  Oh yeah, they reaaally got mistreated.

[garbon]

I hate Wells Fargo so fuck them.

[Kleves]

"By the time she realized she had an adjustable-rate mortgage, and not the fixed rate she thought, it was too late," Perez said. "The damage was done."

Thank God the government was there to ensure she did not have to take any responsibility for reading or understanding anything.

[11B4V]

"By the time she realized she had an adjustable-rate mortgage, and not the fixed rate she thought, it was too late," Perez said. "The damage was done."

Thank God the government was there to ensure she did not have to take any responsibility for reading or understanding anything.

No shit. 

[Neil]

I wonder if the fine is more than the losses they would have taken by lending to blacks?

[Admiral Yi]

Naturally, I expect all of you GOPtards and Big Bigness defenders to blame all dem ol' black folk;  after all, if it wasn't for all those damned dirty minorities, we wouldn't have had a subprime mortgage crisis in the first place. 

I blame both.  You needed willing borrowers and willing lenders for the crisis.

How does a mortgage to an 80 year old work?

[MadImmortalMan]

You're several weeks late.   


WF are seizing up the lending chain as we speak. Cutting out tons of brokers and ramping up their proprietary lending business, probably to make sure they have control over the issuance process themselves. BofA already did this. I expect JPMChase to do the same shortly. Don't expect it to get any easier to get loans any time soon.

[Razgovory]

Naturally, I expect all of you GOPtards and Big Bigness defenders to blame all dem ol' black folk;  after all, if it wasn't for all those damned dirty minorities, we wouldn't have had a subprime mortgage crisis in the first place. 

I blame both.  You needed willing borrowers and willing lenders for the crisis.

How does a mortgage to an 80 year old work?

Of course you do.  Every crime needs both a victim and a perpetrator.  It's much easier to say they both had a role in it and blame both.

[MadImmortalMan]

I'm with Bloomberg. It's Congress' fault. And Fannie and Freddie.



Edit: I especially love the last paragraph of that article from 1999:

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

[Admiral Yi]

Of course you do.  Every crime needs both a victim and a perpetrator.  It's much easier to say they both had a role in it and blame both.

  Presumably you have an audience in mind with comments like "of course you do."  Who is Raz that you are trying to convince that I'm an unthinking bundle of biases that should not be taken seriously? 

It's not at all easier to say that the victim of a crime had a role in it and blame them both.  When I read about a serial killer cutting up 12 victims I don't have to expend any effort to say it's the serial killer's fault.

[Razgovory]

The national press club.

It's easier for you, since blaming a major American business seems to stick in your craw.

[Admiral Yi]

The national press club.

It is an awkward question for you, with no easy answer.

Is it an adaptation of the Manichean principle that the world is divided into pure good and pure evil?  Therefore if you put your self in opposition to evil you are by definition good.

Or maybe a belief that your self esteem and/or status will be improved by undermining your interlocutors.

Or maybe redirected Freudian anger.

It's hard to know, but what is certain is that the stalkerish comments don't work at face value.  If they're an attempt to warn other posters about the illogicalicality of my conclusions, it seems that message is falling on barren ground.  If they're an attempt to put on the record your opinion about me as a poster, that message has already been amply communicated.

[Razgovory]

The stalking thing again?  We've been over this.  Besides, nobody uses Freud anymore.  Using the term "Freudian" is always a signal that person doesn't know psychology.

You don't like my answer "The National Press Club"?


May I ask you a question.  Should a company that violates a law be punished if it means a major worsening of the economy, and more specifically puts you into financial hardship?

[Admiral Yi]

The stalking thing again?  We've been over this.

We sure have.