Alleged "Ghetto Loans" Peddler, City Of Memphis, Shelby County Settle 'Reverse Redlining' Race-Based Discrimination Suit
- Wells Fargo & Co. has agreed to settle a federal discrimination lawsuit the Memphis and Shelby County governments filed against the bank by setting a five-year mortgage lending goal of $425 million here, including $125 million in home purchase lending to low- and moderate-income borrowers.
- The city and county governments filed suit in Memphis Federal Court in December 2009 against Wells Fargo Bank, Wells Fargo Financial Tennessee Inc. and Wells Fargo Financial Tennessee 1 LLC, alleging the company discriminated against its African-American mortgage holders with refinancing that put the homes of those mortgage holders at risk.
- Former Wells Fargo workers from Memphis were among those alleging the company specifically targeted black customers for the refinancing.(1)
(1) See The Daily Record: Ex-workers allege race-based loan approach at Wells Fargo, which, in reporting on a similar lawsuit brought by the City of Baltimore, describes testimony from two former high-ranking Wells Fargo employees stating that Wells Fargo intentionally made bad loans to African-Americans.
The employees, who worked out of Virginia and Maryland but knowledgeable about the company's national lending practices, according to the complaints, said Wells Fargo marketed subprime loans to predominantly African-American ZIP codes and churches, used software to "translate" marketing materials into African-American vernacular, joked that borrowers who were deceptively steered from prime into subprime loans were "riding the stagecoach to Hell," and that company officials referred to the loans in minority communities as "ghetto loans" and to the borrowers as "mud people," according to The Daily Record story.
posted by Home Equity Theft Reporter at 4:04 AM
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