Black, Latino families hit hardest
BALTIMORE — Mayor Sheila Dixon has filed a lawsuit charging Wells Fargo bank with targeting African American homebuyers for subprime loans. The groundbreaking initiative has thrown a spotlight on discriminatory lending across the nation in violation of federal law.
Dixon’s suit, filed Jan. 9, was followed a few days later by a lawsuit filed by the city of Cleveland against 21 banks, including Wells Fargo, charging “reverse redlining,” in which Black and Latino home buyers are pressured to accept unpayable loans.
Cleveland is described as the “epicenter” of subprime foreclosures, with 17,000 vacant, foreclosed homes. The city expects 8,000 foreclosures in 2008.
Cleveland Mayor Frank Jackson accused the banks of knowingly luring people into mortgages with impossible payments. “The money was too good,” he said. The banks “were living large off the misery and suffering of people.”
The Rev. Jesse Jackson, president of RainbowPUSH, called for a massive march on the Department of Housing and Urban Development Jan. 22 to force President Bush to address the foreclosure crisis in his State of the Union message that night.
“We need to take mass action for mass results,” Jackson told a Washington news conference Jan. 15.
Predatory lending has unleashed a flood of foreclosures in a housing collapse that is pushing the economy toward recession. The U.S. Conference of Mayors released a report last November predicting that 1.4 million homes will be foreclosed in 2008, with a combined market value of $316 billion.
Homeowners will lose $1.2 trillion in equity, and the 10 hardest hit states will lose an aggregate $6.6 billion in tax revenues, the report warned.
Since 2000, more than 33,000 Baltimore homes have been foreclosed. Wells Fargo, the city’s second largest mortgage lender, made 1,285 loans a year since 2004, totaling more than $600 million. Two-thirds of Wells Fargo foreclosures were in Baltimore census tracts with 60 percent African American population.
Rose Taylor, a Baltimore housing activist who years ago lost her home in foreclosure, told the World, “This crisis is devastating for working class people. We pull together the money to purchase a home. Predatory lenders then take our property in outrageous foreclosures. We need a moratorium on foreclosures. Shelter is a basic human right.”
President Bush assigned the banking industry to write his plan for dealing with the crisis. Only those whose mortgage payments are current will be assisted. Those behind in their payments are on their own.
Public interest lawyer Matthew Lee, author of “Predatory Bender: A Story of Subprime Finance,” published by Inner City Press in 2003, told the World, “The fact that cities like Baltimore and Cleveland are taking legal action against predatory lending shows that the federal government has been asleep at the switch.”
The Federal Reserve and other federal regulators, Lee said, “have known about these practices for years and did nothing. Whole blocks of our cities are vacant and abandoned because of these practices.”
The publisher’s web site includes a “Wells Fargo Watch,” featuring hundreds of complaints by Wells Fargo customers of being bilked by the San Francisco-based bank, fifth largest in the nation.
Wells Fargo bought out Island Finance, a mortgage bank based in San Juan, Puerto Rico, and has spread its predatory loan business to Aruba, the U.S. Virgin Islands and Panama, the web site reveals. CEO Richard Kovacevich bragged that Wells Fargo is the “number one NAFTA bank, with more banking stores and assets than any competitor within 60 miles of Mexico and Canada.”
Wells Fargo violated the Service Members Civil Relief Act, which requires banks to reduce mortgage interest rates for military personnel. One soldier filed a complaint with the Office of the Comptroller of the Currency (OCC), saying that he informed Wells Fargo just before he was deployed to Iraq in January 2003 that the interest on his two home equity loans should be reduced to 6 percent. “In mid-July when I returned to my residence from the Persian Gulf, I learned from my wife that Wells Fargo never reduced our interest rate to 6 percent as required by law,” he wrote.
The United Steelworkers put up picket lines at Wells Fargo banks to protest their bankrolling of Oregon Steel/CF&I in its five-year drive to bust the union at its Pueblo, Colo. steel mill a few years ago. The workers ultimately won that fight.
Wells Fargo is donating $250,000 to fund the Republican convention in Minneapolis later this year.