The Truth About Wells Fargo
A recent New York Times article drew attention to the discriminatory practices used by Wells Fargo against African Americans. The article focuses on Baltimore, where officials have filed a suit against this lender.
The article includes testimony from a former Wells Fargo employee, Beth Jacobson, who admitted that she and her fellow loan officers systematically singled out blacks for high-interest subprime mortgages. The toll taken by Wells Fargo’s policies on the city is terrible.
Unfortunately, according to a report (PDF) from the National People’s Action (NPA), Baltimore is just the tip of the iceberg when it comes to Wells Fargo’s unjust lending policies. They report that “Wells Fargo, and its correspondent lending channels, issued many types of problematic loans that are now at the center of America’s home foreclosure crisis.” And here are their sobering findings on Wells Fargo’s discriminatory practices:
- Over 37% of all loans made by Wells Fargo to African American borrowers were high cost loans; compared to 12% of loans received by White borrowers.
- 45% of all refinance loans received by African American borrowers were high cost, compared to 19% for White borrowers.
- For low- and moderate-income borrowers, 48% of all Wells Fargo loans to African Americans were high cost loans as compared to 20% of the loans for equivalent White borrowers.
- For middle and upper income African American borrowers, 34% of Wells Fargo loans were high cost loans as compared to 11% for equivalent White borrowers.
- African Americans were charged higher interest rates on high cost loans than other borrowers.
- African Americans paid an estimated $137 million more than Whites for their high cost Wells Fargo loans.
Fair lending laws, which outlaw discriminatory lending such as this, have been on the books for years. Unfortunately, they have not been enforced. NPA, AFFIL and other nonprofits are calling for serious enforcement, and applaud the Baltimore officials for stepping into the gap created by national regulators who have failed to do their jobs.
AFFIL’s Principles of Fairness in Lending speak to the problem of discriminatory lending. Equality states that “We all must have equal access to appropriate and fair products and services regardless of race, gender, language, national origin, physical/mental well-being, education, lifestyle or socioeconomic status. All discriminatory lending practices must be abolished.”