Does Wells Fargo Hate Black People?

The country's largest mortgage lender is under fire (again) after the Pa. Human Rights Commission accuses it of doing some shady things.

By Daniel Denvir
Add Comment Add Comment | Comments: 7 | Posted Aug. 3, 2010

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The country’s largest mortgage lender faces accusations of predatory lending. Again.

Last week, the Pennsylvania Human Relations Commission, the state agency charged with enforcing civil-rights laws, accused Wells Fargo of targeting Philadelphia African-Americans for high-cost loans. The Commission alleges that from 2004 through 2008, Wells Fargo targeted African-Americans and African-American neighborhoods for predatory and unfair lending practices, triggering a higher rate of foreclosures.

The firestorm engulfing the country’s real-estate market burned hottest throughout black America. During the four-year period, 51.5 percent of loans to blacks in this city were high-cost, while only 18.5 percent of those to white borrowers were. It holds true any way you look at it: The blacker the neighborhood, the higher the cost of the average loan, and the larger the rate spread—the amount of money the bank makes off a loan due to interest rates.

Dana Porter, 45, bought her house in 2002 through Wells Fargo. At the time, Porter was an IRS tax examiner, so she did her homework before looking for financing and insisted on a fixed-rate mortgage. But Porter says what she received instead was an adjustable-rate mortgage, or ARM, which can skyrocket after an initial fixed-rate “teaser” period.

“I put extra money down so that my mortgage payments would be $550 a month for at least five years. After two years, it went up $100. Every year after … it went up.”

During the height of the housing bubble, ARMs were particularly widespread in black neighborhoods. Some, like Porter, allege they were misled into the loans. In other cases, according to the complaint, Wells Fargo failed to properly underwrite the loans, only ensuring the borrowers’ ability to pay the initial low rate.

For Porter, trouble at work pushed her finances to the brink.

“I ended up losing my job, and I wasn’t able to pay my mortgage,” she says. “At one point in time, it [the house] was going up for sheriff’s sale once every three months.”

Porter says she applied for and was accepted to the federal Home Affordable Modification Program. But things didn’t get easier.

“Every month I was sending them my financial information, and they kept saying they didn’t get it,” says Porter. “I was then denied the modification, and the payment was higher than it was supposed to be.”

Porter says she received a letter in June laying out a payment plan for March, April and May. “The letter was dated December 2009,” she says.

Wells Fargo refused to respond to PW ’s questions about the complaint, but released the following statement.

“We do not tolerate discrimination against, or unfair treatment of, any consumer. We practice responsible lending with the overarching principle of only approving mortgage loan applications where we believe the borrower has the ability to repay the loan, and our loan decisions are based on credit and transaction risk. We are committed to serving all customers responsibly and fairly, and we will vigorously defend the Commission’s unfounded claims.”

Wells Fargo is also defending itself against Baltimore, Memphis, Tenn., and the state of Illinois, all of which have filed similar suits against the San Francisco-based bank. In January, a federal judge threw out Baltimore’s complaint for being overly broad, and the two cities have now filed amended lawsuits.

Some of Wells Fargo’s problems were baked into the very architecture of its loan system. The bank charged higher interest rates on smaller loans, regardless of the homeowners’ credit worthiness. This had a disproportionate impact on black Philadelphians since they are more likely to own a home worth less than $75,000 than are white homeowners. But the predation was also far more explicit. The complaint highlights several strategies Wells Fargo allegedly used to mislead even financially savvy borrowers like Porter:

“Respondents’ predatory practices identified in the report include charging excessive fees; charging excessively high interest rates that are not justified by borrowers’ creditworthiness; requiring large prepayment penalties while deliberately misleading borrowers about the penalties; using deceptive sales practices to wrap insurance products into mortgages; convincing borrowers to refinance mortgages into new loans that only benefit Respondents; deceiving borrowers into believing that they are getting fixed rate loans when they are really getting adjustable rate loans, and more.”

This is no accident of the market—banks have software that help predict a borrower’s ability to pay. According to the complaint, Wells Fargo eagerly courted African-Americans. At the height of the housing boom in 2005, the bank held a series of “wealth building” seminars targeted at African-Americans, headlined by (now repentant) black media personality Tavis Smiley. After getting interested parties in the door, loan officers allegedly mislead borrowers, steering them away from lower-cost loans for which they were qualified.

Indeed, the Commission claims that Wells Fargo was so dedicated to tailoring a special approach that their computer program actually had a pull-down “language” menu that included “African-American” as an option.

Foreclosures devastate not only individuals who lose their homes, but entire neighborhoods and cities. A 2004 study found that every home within 150 feet of an abandoned home in Philadelphia lost an average of $7,627 in value, continuing to take thousands of dollars out of homes up to 449 feet away. Vacant properties also foreclose on tax revenue and cause increased crime, burdens that cities like Philadelphia can ill afford.

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Comments 1 - 7 of 7
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1. REPUBLICANJOE said... on Aug 4, 2010 at 04:25PM

“This article is quite dumb. Everyone was mislead by "qualified loan officers" for mortgage brokers and bankers during the housing boom. Of course there will be demographic information asked during the application process. The bigger problems is RAM (reverse amortized mortgages) that literally steal the equity an elderly homeowner has built through decades of homeownership. The issue in both circumstances is one of consumer competency- as a foundational breach of contract. THINK ABOUT IT....VOTE REPUBLICAN....let the leaders lead!!!”

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2. Vic Torino said... on Aug 5, 2010 at 09:39AM

“Here we go again. Blame everything on white racism. The article mentions that Dana Porter was a tax examiner who did her homework before applying for a home loan, yet she signed on for an ARM. Then we get this vague allusion to her having difficulties at her job before losing it. Maybe she didn't do her homework and maybe she lost her job because she's incompetent. Maybe that's why she can't afford her mortgage payments. If a disproportionate number of blacks are facing forclosure, maybe it has more to do with bad decision making and irresponsible personal behavior.”

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3. Jer said... on Aug 5, 2010 at 02:33PM

“The fact of the matter is that the Government leaned heavily on banks to loan to higher percentages of minorities and high-risk borrowers or risk the governments wrath starting with the Carter Administration and continuing through the Bush Administration. The banks had to create mortgage backed securities and ARMs to mitigate the risk posed by these borrowers. Couple these facts with artificially low interbank lending rates set by the Federal reserve and you have a recipe for disaster. The housing crises was created by the government, all of it: Democrats, Republicans, and the Federal Reserve.”

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4. Anonymous said... on Aug 5, 2010 at 03:29PM

“Would it have been too much like journalism for the reporter to indicate that the lawsuits from Memphis, Baltimore and even the national suit brought by the NAACP were all dismissed?”

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5. Daniel Denvir said... on Aug 6, 2010 at 09:26AM

“About half-way down the page: "In January, a federal judge threw out Baltimore’s complaint for being overly broad, and the two cities have now filed amended lawsuits."”

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6. Vince said... on Aug 9, 2010 at 01:01AM

“Hmm, here is what I see:

Borrower is Black

Borrower was a credit risk

Bank charged more for loans due to risk of default vs. denying loan altogether, giving said borrower a chance at the American dream

Borrower was too stupid to read contract before signing (ARM vs. Fixed)

Borrower cries when interest rate rises..obvious White conspiracy to take back property in black areas for expensive white-owned luxury condos (ok, I made that part up)

Wels Fargo at fault for not keeping said borrower employed so he could pay for the mortgage

Ebonics is OK to encourage as a part of Black "culture" but don't have a pull-down menu as a language option.”

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7. Fela Watusi said... on Oct 15, 2014 at 11:35AM

“A Wells Fargo $500,000.000 Trust is about to FAIL due to REMIC FRAUD and a FORGED ASSIGNMENT of MORTGAGE.... THIS is the Complaint that was sent by a Constituent of the NATIONAL ACTION NETWORK BRONX CHAPTER .........


I have filed a Petition for Arrest on Sept. 19th 2014 in Bronx Supreme Court under Index. No. 251492/2011.
I, as the Petitioner, requested the immediate arrest of Ted May Esq. pursuant to NY PL 170.30 FORGERY & NY PL 175.35 OFFERING A FALSE INSTRUMENT FOR FILING as the perfection of these crimes against me and the state occurred on March 6th, 2014.
In addition to this filing, I have formally submitted the aforementioned Petition to Sgt. Weck at the 47th Precinct along with the hard copy evidence/exhibits that included; the forged instrument(assignment of mortgage), the Prospectus(Pooling and Servicing Agreement) of the TRUST that indicates the Origination Date of said TRUST, the Wells Fargo Foreclosure Attorney Manual(in relevant part; that proves the intent), and publicly printed press stories from the Wall Street Journal and the Washington Post that expose the nature and gives context to the illegal activity that has greatly affected me.
The TRUST was created on April 1st, 2003, as revealed by the Pooling and Servicing Agreement and the Prospectus of said TRUST. The assignment of mortgage that was filed in NYC Register(CRFN): 2004000777740, by Ted May Esq., has a transfer date of February 6th, 2003(assignment date). The information contained in the assignment of mortgage is false and represents an impossibility, as something cannot be transferred into something that does not exist, thus making the instrument(assignment of mortgage) a forgery.
In addition, the original assignment of mortgage document was altered and forged by Ted May Esq. by means of erasure of the intended transferee Greenwich Capital Financial, and inserting, by hand, the TRUST information, neglecting the fact that the TRUST was not in existence on February 6th, 2003 and became into existence on April 1st, 2003 as recorded and in the Prospectus []

{User Name= FraudBuster Password=Rcg@1162} forward to [] .
This illegal activity was a conscious falsity by Ted May Esq., with intent to defraud, as the transfer never could have happened, and never did happen, and all the subsequent deed activity occurring at the NYC Register must, pursuant to NY Code - Section 392, must be rendered to nullity.
I have not heard from Sgt. Weck since the delivery of the materials and it has been over 30 days.
Due to these illegal activities, the title records of my home have been altered, without court order, and with improper influence from third parties, to reflect Wells Fargo as the owner of my property. I want this corrected, as a matter of law, immediately, with executive order from the Mayors Office, since it appears that due to my race, nonchalance and indifference is controlling and made manifest by the parties who have been contacted to date.
I can prove, with prima facie evidence, and beyond a reasonable doubt, that I am the rightful owner of the property in question, and that, the forged instrument that was filed in the Register by Ted May Esq., is the instrument of fraud currently affecting the land records of my property.
I am hereby requesting that this agency take steps to rectify this outrageous error and further investigate and force the arrest of Ted May Esq. and all other parties, akin to, involved with, and in cooperation with the gross malfeasance that has been revealed by my discovery.

Please contact me at and/or my (text only) number 661-412-0119
my cell phone number is 646-625-0863.

Thank You in advance,
Richard Gordon
Economic Crisis Division Chair
Nan Bronx Chapter”


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