Top 5 cities where safety is not a question

Top 5 cities where safety is not a question

Number one shouldn't be a shocker

Where's Watt?

FHFA scorecard should be marked tardy

Rentership society? Insider trading on Russian sanctions?

What We're Reading: The Good Friday edition
W S

Illinois AG Sues Wells on Alleged Reverse Redlining

Illinois Attorney General Lisa Madigan is suing Wells Fargo (WFC) on alleged predatory lending practices and discrimination against African American and Latino borrowers. The Illinois AG's suit, filed in Cook County Circuit Court, claims Wells engaged in a practice called "reverse redlining," in which lenders are said to target minority consumers or residents of minority neighborhoods for high-cost subprime mortgages. Madigan's complaint alleges Wells targeted marketing programs in areas considered minority-populated. In 2005, according to an analysis of Chicago-area data, approximately 45% of Wells' African American borrowers and 23% of the lender's Latino borrowers received a high-cost mortgage, compared with 11% of white borrowers that received high-cost mortgages that year. In 2006, 58.5% of its African American and 35% of its Latino borrowers received high cost mortgages, compared with 16% of its white borrowers. As of 2006, Wells was the Chicago area's second-largest lender by volume, from '05 to '07 originating more than 60,000 mortgages -- of which 12,000 were high cost, according to the complaint. “As a result of its discriminatory and illegal mortgage lending practices, Wells Fargo transformed our cities’ predominantly African-American and Latino neighborhoods into ground zero for subprime lending,” Madigan said in a statement. “The dreams of many hardworking families have ended in foreclosure due to Wells Fargo’s illegal and unfair conduct.” The case alleges Wells Fargo Financial Illinois, a Wells subsidiary that originated subprime loans, also engaged in deceptive business practices by misleading Illinois borrowers regarding mortgage terms and refinance benefits. It also claims the company repeatedly financed borrowers' mortgages without providing any real benefit to consumers. "In addition, Wells Fargo Financial used deceptive mailings and marketing tools to confuse borrowers as to which division of Wells Fargo and Company they were doing business with -- prime or subprime," the complaint reads, in part. "As a result, borrowers believed they were doing business with Wells Fargo Home Mortgage, which offered mainly prime loans, when in fact they were dealing with Wells Fargo Financial, a predominantly subprime lender." The suit calls for the rescission of all contracts entered between Wells and Illinois consumers through the use of unlawful methods and asks that Wells grant full restitution to borrowers. The case also calls for civil penalties for the violations. Write to Diana Golobay.

Recent Articles by Diana Golobay

Comments powered by Disqus