Jun 22, 2009
In 2008 the city of Baltimore sued Wells Fargo Bank for openly pushing subprime mortgages on black people. A federal district court judge has still not ruled whether the lawsuit can go forward.
In Baltimore, like so many other cities and states, foreclosures are up, houses are empty, city revenues – that depend heavily on property taxes – are down.
Two loan officers, who no longer work for Wells Fargo, provided affidavits about how Wells Fargo pushed these subprime mortgages. One of them stated, “Wells Fargo ... targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”
Not only did Wells Fargo target mainly black customers for these mortgages. It was eight times more likely to push a black mortgage holder in Baltimore into a subprime mortgage than a white mortgage holder of the same income level. (A similar analysis done in New York City showed black mortgage holders were five times as likely as white mortgage holders of similar income to hold subprime mortgages.)
The second loan officer’s affidavit described in detail how overtly racist Wells Fargo management was, referring to subprime loans as “ghetto loans” and referring to black customers as “mud people.” The affidavit also details how loan officers got cash bonuses for “aggressively marketing subprime loans in minority communities.”
For Wells Fargo, behind this racist mortgage strategy was profit. Subprime mortgages are set with higher interest rates and more points, so mortgage companies make more money from them.
The victimized mortgage holders have been losing their homes, but the racists at Wells Fargo are alive and well.