Are Wells Fargo’s lending practices racist?

BY ED FELIEN

According to the New York Times Sunday, June 7, edition, the City of
Baltimore is suing Wells Fargo for racist lending practices that “tipped hundreds of homeowners into foreclosure and cost the city tens of millions of dollars in taxes and city services.”

Loan officers from Wells Fargo have admitted, “in an affidavit filed last week that employees had referred to blacks as ‘mud people’ and to subprime lending as ‘ghetto loans.’

“The New York Times, in a recent analysis of mortgage lending in New York
City, found that black households making more than $68,000 a year were nearly five times as likely to hold high-interest subprime mortgages as whites of similar or even lower incomes. (The disparity was greater for Wells Fargo borrowers, as 2 percent of whites in that income group hold subprime loans and 16.1 percent of blacks.)

“These practices took a great toll on customers. For a homeowner taking out
a $165,000 mortgage, a difference of three percentage points in the loan rate—a typical spread between conventional and subprime loans—adds more than $100,000 in interest payments.”

This legal action  by the City of Baltimore raises serious questions about the validity of subprime mortgages made in South Minneapolis.  This is a matter that should be investigated by the Minneapolis city attorney, the Hennepin County attorney and the Minnesota attorney general, but it is unlikely that there will be much support from those quarters.  Cheri Honkala of the Poor People’s Economic Human Rights Campaign says, “

This is why MN PPEHRC is working around the clock to raise money for a class action suit against Wells Fargo. Three of our families are losing their homes after 20 years to Wells Fargo! Anyone interested in helping to raise this money please contact Ann Patterson at 612-940-1040.”