Wells Fargo will pay $175 million in compensation to more than 30,000 minority borrowers who allegedly were steered into riskier, more expensive loans during the housing boom.
US News tells MHProNews that the Deparment of Justice (DOJ) alleged the nation’s biggest residential home lender charged African-Americans and Latino borrowers higher rates and fees for home loans.
Bloomberg said that occured even when the borrowers qualified for better rates and terms.
While Wells Fargo does manufactured home ‘land-home’ loans, this case focused on conventional housing.
But that doesn’t change the fact that the the federal government is proving time and again that they are willing and able to go after big lenders. Insiders say it sends a message to smaller lenders that they don’t have a chance. When it comes to steering, wise sellers and lenders just say no.
Cook County Illinois accused the WFC of predatory lending and they are seeking $300 million. The County claimed: “The bank’s tactics start at home-loan origination and continue through refinancing and foreclosure, the country said, a process its lawyers summarized in the complaint as “equity stripping.” The process may have involved as many as 26,000 loans.” Other cities and states have pursued WFC too.
Kathleen Day, spokeswoman for the Center for Responsible Lending says, “The people who lost their homes because they got bad loans, it will take them generations to recover.”
The other side of the coin is covered in a related story, linked below. U.S. Bank Chief Executive Richard Davis says they’ll stand pat on current underwriting, because the risk of fines – like those just taken by Wells Fargo – is far too great.
Said David “Unless we are convinced that the rules are going to be permanent and there is not going to be a look back or a reach back in future times…we are simply going to stay on the sidelines in the concerns of both compliance risks and other uncertainties.” – See more about who will and won’t use relaxed lending standards and why at this link. ##
(Photo credit: Bloomberg)
