Wed April 7, 2010
Memphis Amends Predatory Lending Lawsuit Against Wells Fargo
By Candice Ludlow
Memphis, TN – Today, Memphis and Shelby County amended their lawsuit against Wells Fargo. The lawsuit claims the bank targeted minorities with subprime loans. Candice Ludlow explains.
Just before the New Year, Memphis and Shelby County sued Wells Fargo. Since the suit was filed, four former Memphis Wells Fargo Financial employees have stepped forward.
"The first of these employees is Camille Thomas," John Relman explains. He's one of the top housing attorneys in the nation. He's working on the case.
"Miss Thomas worked as a loan processor at Wells Fargo Financial. She explains in her declaration exactly how they targeted African Americans for subprime loans. She said that the general view was that African Americans were "less sophisticated and intelligent and could be manipulated more easily into a subprime loan than white customers. She heard employees joking with one another about the race of customers, saying things like, you know that guy's not so smart because he's black.'"
Relman says Thomas describes how people were targeted.
"She explains that people were cold called. That they identified people in the African American community to cold call, and that they engaged in a practice sending out what's called Live Checks. That is you'd receive a check in the mail. It would say you can cash this check. What you wouldn't know is as soon as you cash this check it becomes - for $1,000 or $2,000 - it becomes a loan at a extremely high interest rate. They'd then target that person and offer to refinance them at a lower rate, but it was still a very high rate. And they would put that loan onto the house. So where's they hadn't been at risk for their house, now their at risk because they can't pay it."
Wells Fargo refutes the city and county's claims, saying, "Wells Fargo believes collaborative problem-solving, not divisive litigation, is the key to reversing the national problem of home foreclosures. We stand by our fair and responsible lending practices. We're hoping the leaders of Memphis and Shelby County will end their pursuit of inflammatory claims that are not representative of our company's sanctioned practices."
Originally, Memphis and Shelby County sued Wells Fargo under the Federal Fair Housing Act. Now, they're also claiming that Wells Fargo loans violated the Tennessee Consumer Act.
Baltimore filed a similar lawsuit against Wells Fargo first. Today, Relman filed an amended complaint against the bank in Baltimore, as well.