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Bank ‘Pushed’ Sub-Prime Loans On Blacks

From the shameless re-writers of history at the New York Times:

A foreclosed home on Barclay Street in Baltimore. The city is suing Wells Fargo Bank over its mortgage lending practices in black neighborhoods.

Bank Accused of Pushing Mortgage Deals on Blacks

By MICHAEL POWELL

June 7, 2009

As she describes it, Beth Jacobson and her fellow loan officers at Wells Fargo Bank “rode the stagecoach from hell” for a decade, systematically singling out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages.

These loans, Baltimore officials have claimed in a federal lawsuit against Wells Fargo, tipped hundreds of homeowners into foreclosure and cost the city tens of millions of dollars in taxes and city services.

Wells Fargo, Ms. Jacobson said in an interview, saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into subprime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as “mud people” and to subprime lending as “ghetto loans.”

“We just went right after them,” said Ms. Jacobson, who is white and said she was once the bank’s top-producing subprime loan officer nationally. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”

Ms. Jacobson’s account and that of the other loan officer who gave an affidavit, Tony Paschal, both of whom have left Wells Fargo, provide the first detailed accusations of deliberate racial steering into subprimes by one of the nation’s top banks.

The toll taken by such policies, Baltimore officials argue, is terrible. Data released by the city as part of the suit last week show that more than half the properties subject to foreclosure on a Wells Fargo loan from 2005 to 2008 now stand vacant. And 71 percent of those are in predominantly black neighborhoods.

Judge Benson E. Legg of Federal District Court had asked the city to file the additional paperwork and has not decided whether the lawsuit can go forward…

Wells Fargo officials have declined detailed interviews since Baltimore filed suit in January 2008. In an e-mail statement on Friday, a spokesman said that only 1 percent of the city’s 33,000 foreclosures have come on Wells Fargo mortgages.

“We have worked extremely hard to make homeownership possible for more African-American borrowers,” wrote Kevin Waetke, a spokesman for Wells Fargo Home Mortgage. “We absolutely do not tolerate team members treating our customers or others disrespectfully or unfairly, or who violate our ethics and lending practices.” …

The N.A.A.C.P. has filed a class-action lawsuit charging systematic racial discrimination by more than a dozen banks, including Wells Fargo.

At the heart of such charges is reverse redlining, specifically marketing the most expensive and onerous loan products to black customers

The affidavits of the two loan officers seem to bolster Baltimore’s lawsuit. Mr. Paschal, who is black and worked as a loan officer in Wells Fargo’s office in Annandale, Va., from 1997 to 2007, offers a sort of primer on Wells Fargo’s subprime marketing strategy by race.

In 2001, he states in his affidavit, Wells Fargo created a unit in the mid-Atlantic region to push expensive refinancing loans on black customers, particularly those living in Baltimore, southeast Washington and Prince George’s County, Md.

“They referred to subprime loans made in minority communities as ghetto loans and minority customers as ‘those people have bad credit’, ‘those people don’t pay their bills’ and ‘mud people,’ ” Mr. Paschal said in his affidavit.

He said a bank office in Silver Spring, Md., had an “affinity group marketing” section, which hired blacks to call on African-American churches.

“The company put ‘bounties’ on minority borrowers,” Mr. Paschal said. “By this I mean that loan officers received cash incentives to aggressively market subprime loans in minority communities.”

Both loan officers said the bank had given bonuses to loan officers who referred borrowers who should have qualified for a prime loan to the subprime division. Ms. Jacobson said that she made $700,000 one year and that the company flew her and other subprime officers to resorts across the country

These practices took a great toll on customers. For a homeowner taking out a $165,000 mortgage, a difference of three percentage points in the loan rate — a typical spread between conventional and subprime loans — adds more than $100,000 in interest payments.

The accusations contained in the affidavits, which were given to Relman & Dane, a civil rights law firm working with the City of Baltimore, have not drawn a specific response from Wells Fargo. But city officials say the conclusion is clear.

“They confirm our worst fears: that this is not just a case based on a review of numbers and a statistical analysis,” said the city solicitor, George Nilson. “You don’t have to scratch your head and wonder if maybe this was just an accident. The behavior is pretty explicit.”

Talk about the world turned upside down.

If Wells Fargo did try to target blacks for loans, it was only at the behest of the NAACP and government imposed regulations which were forcing banks to give mortgages to underserved communities.

After all, what bank in its right mind would want to give a mortgage to someone they didn’t think could repay it, unless they were forced to do so?

And if this was such a wide-spread practice, as we are constantly assured by our media masters, why is it only now that people are stepping forward?

And why only two out of the thousands who must have been involved in this nationwide conspiracy?

We think you know why.

By the way, according to the Baltimore Sun, Mr. Paschal adds another fun and equally unbelievable detail to this story:

Former loan officer Tony Paschal said Wells Fargo targeted black communities for bad loans by focusing on African-American churches, using black employees as its public face, and using software to translate marketing materials into various languages, including something called "African American."

Who can’t doubt that he is a reliable witness here?

This article was posted by Steve on Monday, June 8th, 2009. Comments are currently closed.

22 Responses to “Bank ‘Pushed’ Sub-Prime Loans On Blacks”

  1. Rusty Shackleford says:

    “Why did you sting me?” the fox asked as it lay there, dying.

    The black man looked at the fox and said, “That’s what I do, you knew that before you gave me a ride across the stream.”

  2. Ragspierre says:

    The targeted banks need to subpoena Janet Reno, the Clinton AG who mau-maued the financial industry to force them into making loans they would not rationally make.

  3. proreason says:

    What is never said is tremendous amounts of money are lost on each loan that must be foreclosed.

    Forcing people into loans they cannot repay would be like selling ice cream at half what it costs to make.

    But testing their “reporting” for economic sanity is far beyond the capability……or political agenda……of the msm.

  4. caligirl9 says:

    Looks like the banks were correct in the first places calling those mortgages subprime, with that many defaulting. The value of the real estate was no doubt overinflated, too.

  5. badcrow says:

    Sure, they “forced” the loans on those poor disadvantaged home seekers. (Anyone remember the croc tears of that older black woman…”I needs me my own baffroom, I needs me my own house, Help me Mr. Obammy!” She was a fraud, and probably still living in a free house while she games the system!)
    I tried to get a loan for a house, but was denied because of the tremendous burden of my student loans. So no house for me. My girlfriend’s college roomate, a black woman, was able to get a substantial loan, and a very nice house. Why? Her college was paid for through affirmative action initiatives (and she was admitted with lower scores!), and she was also given a grant for a downpayment on her “own baffroom.”
    So my girlfriend and I busted our asses working two jobs while going to school and we mortgaged our futures with student loans. We’ve been passed over for employment for “quotas,” watched our childhood neighborhoods deteriorate into ghettos because of “diversity,” and are unable to get an equitable mortgage to get OUR own “baffroom.”
    Now my parents house is surrounded by sub-primers and the once tidy homes on that street have knee high grass, cars parked in THE MIDDLE OF THE STREET, shifty characters snooping around the yards, blaring speakers at all hours and the evil glares of the new residents as they stop traffic to shuffle across the street.
    Makes me sick to think my tax money is going towards funding the very destruction of this nation.
    This is Obammy’s America.

    • proreason says:

      But badcrow, all cultures are equally good. Just different, that’s all.

    • badcrow says:

      So they would have us believe, Pro. However, I would say that such sentiments are demonstrably false. You see, my generation has been indoctrinated since our early childhood to accept “the all cultures are equal” thesis. This propaganda message is ingrained in our education, it runs through television, music, art and all popular culture. So the average person tows the party line, until they mature and start to notice that the world around them is very different than they were brainwashed to accept. What they “actually” see, with their own eyes, does not bear even a passing resemblance to what they were “taught” to see. They start to notice entire neighborhoods decay as Section 8ers move in. They’re told that more whites are on welfare than blacks but they never see whites loading up their grocery carts with Filets and Jumbo Shrimps and paying for it with food stamps. They see inferior, unqualified students and employees get a free ride under affirmiative action and then witness the disasterous results of promoting and supporting the unqualified.
      As they learn these things they also learn that they will be villified and hated for pointing out the things they “actually” see as opposed to the things they are “told” to see. There is an obvious disconnect between the reality and the indoctrination to a false reality.
      I realize I tread on dangerous ground here, I don’t want to be categorized as a racist. I in fact, deplore racial judgements in any form. What I cannot do, is ignore the things I see with my own eyes and deny the application of reason. Let’s leave race out of the equation and look at the aspects of any culture that contribute to success or failure of its’ members. For example, ANY culture that tolerates and entitlement mentality gives up the freedom to act as independent actors in their own lives–they must rely on others for their support. Any culture that tolerates multiple children by multiple mothers, and accepts abandonment of these offspring as normal, dooms future generations. Any culture that accepts crime as “sometimes necessarry” for prosperity or “fairness,” will be ridden with crime. And so on. Any of these factors, when applied to ANY culture that accepts them as desirable will fail, as these attributes are not successful in producing vibrant, positive societies.

    • TwilightZoned says:

      BC,

      “What they “actually” see, with their own eyes, does not bear even a passing resemblance to what they were “taught” to see.”

      What you described is the difference between liberals and conservatives. Dr. Bill Bennett gave the best definition I’ve heard. A liberal sees the world the way it should be, a conservative sees the world the way it really is.

      A good friend of mine, a liberal-God bless her heart, thinks we should strive for an utopian society where everyone gets along and helps one another. That would be wonderful if free will didn’t get in the way. There will always be those that don’t care, take advantage of, play the victim, are lazy, etc. That is the real world. Should we take advantage of people? Of course not, but we shouldn’t reward or enable laziness, bad behavior, etc. either.

    • proreason says:

      “I don’t want to be categorized as a racist”

      I got over it.

      They don’t set the rules for me anymore. I’m interested in the truth, not their agenda.

      With my rules, racists are people who exploit people of other races for their own benefit. I don’t do it. They do.

    • badcrow says:

      Zoned,

      I’m familiar with Bennett’s quote. There is an element of truth there. But I would have to say that Conservatives see the world as it ought to be. Citizens “ought” to value responsibility, independence, work ethic, equality of opportunity and paying their own way. If these values were universally respected, and the values of the opposing philosophy universally dismissed as unproductive and failure oriented–we would have the better world that we all desire. So it is conservatives who have the proper vision, and Progressives who embrace illogical and destructive values due to reasons not related to logic and good sense.

    • TwilightZoned says:

      Very valid point BC. “If these values were universally respected…” It’s that free will thing again though that gets in the way.

      “So it is conservatives who have the proper vision, and Progressives who embrace illogical and destructive values due to reasons not related to logic and good sense.”

      Most excellent perception!!!

    • Flession says:

      “Everyone’s a little bit racist sometimes…doesn’t mean we go around commiting hate criiiimmmeeesss…”

      Sorry, the song just popped into my head.

      But, yea, dittos for you, badcrow.

      Although I do agree with Pro. I’ve been accused of racism twice in my life, both time for the dumbest things ever (I wouldn’t give a woman a cookie at my hotel because we changed policies. She informed me [as I was confused on it], that it was because she wasn’t some “white bitch”…and the second was because I had valid arguements against Obama during the election and my co-worker couldn’t argue them.)

    • neocon mom says:

      Badcrow, the generational indoctrination of our culture is particularly why I don’t believe many details of this story. Using racial epithets in the workplace is a sure way to get noticed quickly and is an intolerable practice for lots of reasons.

      While I do believe banks had to find strategies to lend to more minorities or else (lawsuits, gov’t pulling the plug) this story reeks of “community activism”. As contrived as the details seem, the sad part is how easily this thesis will quickly be accepted because it denigrates the evil, greedy bankers. I wouldn’t put it past Mike Moore to make a new “film” based on this conspiratorial idea, the “forcing” of mortgage loans on minorities and all of the usual fave bugaboos will be indicted; banks, corporations and of course, Bush.

    • badcrow says:

      NeoConMom,
      Yes the details of this piece are a bit ripe. Reminds me of Journalism classes at Pitt. Fit the propaganda to the story. In other words, students learn through carefully orchestrated osmosis (so carefully done that the Profs don’t even recognize their part in the manipulation, they are already converts…) that certain liberal “themes” about the world are encouraged and rewarded. They then find opportunites to insert these themes into stories, or to even observe events through the “lense” of these themes. They are immediately rewarded for parroting the approved ideology with choice assignments, good grades and coveted internships. A thinking student, doing true investigations and objective reporting soon realizes that he/she is being punished for his work. The student, having his future mortgaged with education costs, and understanding that he will not be given an opportunity in the field he has trained for soon gets “in step,” keeping actual feelings to himself in order to survive. Sounds an awful lot like 1984, doesn’t it? That’s ’cause it is.

  6. Right of the People says:

    I’m sure Wells Fargo sent gangs out to kidnap unsuspecting people off the street and drag them into the bank where they were forced to sign the mortgage papers. In most other countries around the world this lawsuit would be called slander! It is ludicrous to even imagine that some business would knowingly make bad loans to people they knew couldn’t pay them back unless they were coerced into doing so. Thinking about this makes my head want to explode. It’s time for some Wild Turkey.

    • TwilightZoned says:

      Absolutely. Banks give out loans to make money pure and simple. They don’t willingly take on high risk clients unless forced. It would be bad business.

  7. Liberals Demise says:

    Hep me, Hep me, Hep me NAACP!!!
    Heps me save mysef froms mysef!!
    Afta youse made dem gives me da loan, they expects me to pays da loan back!!
    HEP ME GET RID OF UNKA CRACKA!!

  8. 12 Gauge Rage says:

    Nobody held a gun to their heads and forced them to take these loans. Despite how hard pushed they were, they could have easily walked away. It’s so easy to play the victim card these days.

    • tranquil.night says:

      Especially with such a large and thuggish force out there dedicated to accumulating vast amounts of wealth, power, and influence off of said victimization. Hell, isn’t Babbles the grand healer of all victims out there in the world? Heck, sign me up to be a victim – do I gotta drink the kool-aid?

  9. take_no_prisoners says:

    I hired a lady to clean my office. I often stay late, so I noticed that she was dropping off her one-eyed husband, who doesn’t drive, to clean the office. It was sort of funny but since she didn’t want to work as an independent contractor and be responsible for all the tax withholding, etc. and insisted that I be her employer, I had to start writing the checks to her husband, the man who actually showed up and did the work everyday. She was sort of upset but I explained that since he was doing the work I was legally obligated to pay him. A little while later I got a letter from the state stating that there would be an unemployment claim charge registered against my unemployment insurance for rating purposes as she filed an unemployment claim. I wrote back informing the powers that be of the situation and they stated that I would still incur the claim on my rating but that I could appeal. I appealed and the F”@&ers at the state unemployment bureau stated that they would split the difference and only register half the amount in my claims experience file. Talk about damned if you do or if you don’t. I didn’t think the lady was smart enough to know about the 13th amendment but I thought the geniuses at the state department of labor would clearly see the merits of my argument. I was livid. There it was, unemployment benefits for a job she wasn’t doing in the first place. I was still paying the same amount of money for the same amount of work by the same person as I was before but I had a claim against my unemployment insurance and they were getting extra money for nothing. A few months later, the man who is doing the work and that I am now paying stated that I made a mistake and payed him a week early. I checked the records and told him that there was no mistake and he said he told the unemployment people he wasn’t getting payed anything that week as he got laid off from his other job. I told him that there wasn’t anything I could do about it and he said he could probably file an amended claim to keep from getting into trouble but I could tell he wanted me to take the check back and pay him a week later. I told him it was his problem and he better do whatever he had to do to fix it. Even more humorous is the fact that she never drops him off anymore! He gets co-workers at his day job, or friends to drop him off and if he has to he walks but I never see his wife anymore!! LOL

  10. Colonel1961 says:

    You got me, Steve! This has to be from ‘The Onion’…

  11. Confucius says:

    Do nothing => you’re a racist.
    Do something => you’re a racist.
    Do even more => you’re a bigger racist.

    It’s seems with the NAACP, the best thing to do is nothing. You’re still a racist, but at least you’re not exasperated.


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