A class action lawsuit against Wells Fargo Bank alleges charges of discriminatory residential mortgage policies and lending practices against its black customers.
The lawsuit filed April 14 in the Northern District of California says the bank approved more white borrowers for a mortgage compared to black applicants in 2020 when the federal CARES law created by the COVID-19 pandemic resulted in historically low interest rates.
It also alleges that black customers, including those with high credit scores, received an average interest rate of 3.34% compared to 3.23% for white borrowers.
The plaintiffs are seeking $5 million in damages, the lawsuit says. They are represented by Tallahassee attorney Ben Crump of Ben Crump Law and co-counsel Linda Friedman and Suzanne Bish of Stowell & Friedman in Chicago.
“Wells Fargo says its mission is to help its customers achieve financial success,” Crump said at a Monday news conference in Atlanta. “They are not helping black Americans succeed financially when they engage in a practice pattern of corporate behavior that denies customers financial opportunities and charges more for the same services than they charge white customers .”
Frustration and disbelief with mortgage practices
Shaia Beckwith Simmons, married with six children, is one of three people named in the lawsuit.
The 43-year-old said she filed a lawsuit against Wells Fargo after the bank began foreclosure proceedings last month for their four-bedroom, three-bathroom home in Midway, Florida.
The family suffered a loss of income during the pandemic, prompting Simmons to receive a 12-month reprieve offered by the CARES Act.
Once she started resuming mortgage payments, Simmons said Wells Fargo declared her mortgage in default. She was given the option of renegotiating her loan at a potentially higher rate or proceeding with the foreclosure.
At the press conference, Simmons was one of a handful of plaintiffs present. Her husband, Florida A&M University football coach Willie Simmons, stood by her side as she expressed frustration and disbelief at the bank’s actions.
“I watched with horror as your banking institution threatened the security of buying and owning a home,” she said. “I’ve held my end of the bargain, and it’s still not enough.”
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Wells Fargo denies the claims made in the lawsuit and released the following statement in response to it and Monday’s press conference:
“We are deeply disturbed by the allegations of discrimination which we believe do not stand up to scrutiny. We are confident that we follow relevant Government Sponsored Enterprises (GSE) guidelines in our decision-making and that our underwriting practices are applied consistently, regardless of a client’s race or ethnicity. These baseless attacks on Wells Fargo stand in stark contrast to the company’s significant, long-term commitment to closing the minority homeownership gap. »
The Covid-19 pandemic has allowed the deferral of payments
The CARES Act provided a forbearance option, allowing borrowers to defer payments during the COVID-19 pandemic. Simmons said she signed up because her husband took a 7% pay cut and the couple were funding their son’s law school.
Simmons, who said her name was on the 2013 mortgage, said she had the house before she got married and hadn’t missed any payments.
Although she contacted the bank every three months regarding the forbearance and did all her banking at Wells Fargo, Simmons said she was told last month that she had not completed the form. necessary for abstention.
“If I had died during the pandemic, my husband might not have been aware of the situation and Wells Fargo would have kicked my widower and my children out of our home and stolen hundreds of thousands of dollars in capital,” Simmons said. .
Despite an offer from the bank, she said she refused to speak to Wells Fargo CEO Charles W. Scharf, adding “I don’t need an apology.”
“I don’t want to talk to the president of Wells Fargo unless you can talk to everyone they’re doing this to, talk to the thousands of other Americans, and fix it for them,” Simmons said.
Wells Fargo has faced other accusations of bias
This is not the first time the bank has faced accusations of discrimination.
In 2012, Wells Fargo Bank agreed to pay at least $175 million to settle charges of discriminating against black and Hispanic borrowers in violation of fair lending laws.
Wells Fargo, the nation’s largest residential mortgage originator, allegedly engaged in a pattern or practice of discrimination against qualified black and Hispanic borrowers from 2004 to 2009, according to the US Department of Justice.
The bank says it was the largest bank lender for mortgages to Black families in 2020, helped more Black families buy homes than the top three bank lenders combined over the past decade, and helped more black homeowners to refinance their mortgages in 2020 than any other bank.
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He said an 83% increase in the company’s refinance loans to black homeowners in 2020 compared to 2019 was also by far the biggest gain among the biggest banks. In 2021, Wells Fargo said it increased that total by 106% over 2020.
Christopher Williams, another plaintiff living in Atlanta, said he applied for a mortgage at Wells Fargo and was offered what he believed to be a high interest rate given his FICO score of over 750.
The lawsuit says Wells Fargo offered Williams an interest rate nearly three points above the prime interest rate offered by the banking giant, “which is disproportionately and discriminatory offered to white applicants,” according to the lawsuit. .
Williams, at the press conference, said he was told an anomaly in his credit report prompted the interest rate offered. However, he said he received few details.
“They told me there were other factors that went into their scoring process,” Williams said, using airline quotes.
Contact TaMaryn Waters at [email protected] or follow @TaMarynWaters on Twitter.