Wednesday, July 27, 2011
The DoJ awakens
And is pressing a criminal case against Wells Fargo for steering black mortgage borrowers into higher priced sub prime loans.
The Department of Justice is preparing a lawsuit against Wells Fargo, the nation's largest home mortgage lender, for allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans, according to three people with direct knowledge of the probe...It is not clear if these were Wells Fargo practices or legacy problems from Wachovia, which ended its days as an unindicted RICO enterprise. Whichever, a banker friend of mine informs me that in the Carolinas, Wells Fargo is now known colloquially as WTF Bank.
Last week, the Fed said that perhaps more than 10,000 borrowers were inappropriately steered into subprime mortgage loans or had their loan documents falsified by bank personnel. Wells Fargo agreed to pay $85 million to settle the civil charges. It did not admit wrongdoing.
In its ongoing case against Baltimore, Wells Fargo stands accused of using those same practices, but deploying them against black borrowers in majority-black neighborhoods, an act commonly known as "reverse redlining." The city alleges that the bank targeted black borrowers, knowing they'd ultimately default on their loans, but did not fear shouldering the cost because Wells sold those loans to investors. Wells Fargo denies the allegations.
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