Wells Fargo Bank sued for race discrimination in mortgage lending practices
A class-action lawsuit against Wells Fargo Bank alleges accusations of discriminatory residential mortgage policies and lending practices against its Black customers.
The lawsuit filed April 14 in the Northern District of California states the bank approved more white borrowers for a mortgage loan compared to Black applicants in 2020 when the federal CARES Act created by the COVID-19 pandemic prompted historically low interest rates.
It also alleges that Black clients, including those with high credit scores, were given an average interest rate of 3.34% compared to 3.23% for white borrowers.
Plaintiffs are seeking $5 million in damages, the lawsuit states. They are being 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 helping customers succeed financially," said Crump, during a press conference Monday in Atlanta. "They're not helping Black Americans succeed financially when they engage in a pattern of practice of corporate behavior that denies financial opportunities to customers and charges more for the same services than they charge white customers."
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Frustration and Disbelief about mortgage practices
Shaia Beckwith Simmons, a married mother of six, is one of three individuals named in the lawsuit.
The 43-year-old said she took legal action against Wells Fargo after the bank began foreclosure proceedings last month for their four-bedroom, three-bathroom home in Midway, Florida.
The family suffered income loss during the pandemic, prompting Simmons to receive a 12-month deferment offered through the CARES Act.
Once she began resuming mortgage payments, Simmons said Wells Fargo stated her mortgage loan was in default. She was given the option to renegotiate her loan at a potentially higher rate or proceeded with the foreclosure.
During the press conference, Simmons was among a handful of plaintiffs in attendance. Her husband, Florida A&M University Football Coach Willie Simmons, stood by her side as she voiced frustration and disbelief regarding the bank's actions.
"I have watched in horror as your banking institution has threatened the security of affording and owning a home," she said. "I kept my end of the bargain, and it's still not enough."
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Wells Fargo denies claims made in the lawsuit and issued the the following statement in response to it and Monday's press conference:
“We are deeply disturbed by allegations of discrimination that we believe do not stand up to scrutiny. We are confident that we follow relevant government-sponsored enterprise (GSE) guidelines in our decision making and that our underwriting practices are consistently applied regardless of a customer’s race or ethnicity. These unfounded attacks on Wells Fargo stand in stark contrast to the company’s significant and long-term commitment to closing the minority homeownership gap."
Covid-19 pandemic allowed deferment of payments
The CARES Act offered a forbearance option, allowing borrowers to defer payments during the COVID-19 pandemic. Simmons said she enrolled because her husband took a 7% pay cut, and the couple was financing their son's education for law school.
Simmons, who said her name is listed on the 2013 mortgage loan, indicated she's had the house prior to getting married and has not missed a payment.
Despite making contact with the bank every three months regarding the forbearance and doing all of her banking at Wells Fargo, Simmons said she was told last month that she didn’t fill out a form needed for the forbearance.
"If I'd died in the pandemic, my husband could have potentially not have known the situation and Wells Fargo would have put my widower and my children out of our home and stolen hundreds of thousands of dollars in equity," Simmons said.
Despite an offer by the bank, she said she declined an opportunity 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 get to talk to everybody else that 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
It's not the first time the bank has faced discrimination charges.
In 2012, Wells Fargo Bank agreed to pay at least $175 million to settle accusations that it discriminated against Black and Hispanic borrowers in violation of fair-lending laws.
Wells Fargo, the nation’s largest residential home mortgage originator, allegedly engaged in a pattern or practice of discrimination against qualified Black and Hispanic borrowers from 2004 through 2009, according to the U.S. Justice Department.
The bank contends it was the largest bank lender for home mortgages to Black families in 2020, helped more Black families purchase homes compared to the next three largest bank lenders combined over the last decade and assisted more Black homeowners refinance their mortgages in 2020 than any other bank.
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It stated an 83% increase in the company’s refinance loans to Black homeowners in 2020 compared with 2019 also was by far the biggest gain among the largest banks. In 2021, Wells Fargo stated it increased that total by 106% compared to 2020.
Christopher Williams, another plaintiff living in Atlanta, said he applied for a mortgage loan with Wells Fargo and was offered what he believed to be a high interest rate considering his 750+ FICO score.
The lawsuit states Wells Fargo offered Williams an interest rate nearly three points higher than the prime interest rate offered by the banking giant, "which is disproportionately and discriminatorily offered to white applicants," according to the lawsuit.
Williams, during the press conference, said he was told a discrepancy on his credit report prompted the interest rate offered. However, he said he received scant details.
"They told me there were quote other factors that went into their scoring process," Williams said, using air quotes.
Contact TaMaryn Waters at tlwaters@tallahassee.com or follow @TaMarynWaters on Twitter.