Memphis and Shelby County, Tennessee File Suit Against Wells Fargo Over Foreclosures
I don’t know if you saw or heard about it.
On December 30, 2009, the city of Memphis and Shelby County, Tennessee where Memphis is located filed a federal lawsuit against Wells Fargo. The suit alleges that Wells Fargo had their loan officers steer members of minority groups who were buying homes and looking for mortgages into subprime mortgages. This was done even though many of these people may have qualified for conventional or FHA mortgages.
The suit alleges that Wells Fargo took this action to increase their profits. They did not think about the ultimate outcome that might occur. The interest rates on these subprime mortgages were quite a bit higher than the interest rates on either the conventional or FHA mortgages. Many of the people who got these mortgages could not continue to make the monthly payments and foreclosure action commenced. As a result of Wells Fargo’s action a disproportionate and unnecessary number of foreclosures were finalized.
The suit contends that Wells Fargo targeted African-American neighborhoods in Memphis and Shelby County. Over 43% of the foreclosures on Wells Fargo’s’ mortgages in Memphis and Shelby County were on homes in these neighborhoods even though only about 15% of all of their mortgages in the area were on homes in these neighborhoods. Over 59% of their mortgages in Memphis and Shelby County were on homes in white neighborhoods. Foreclosures occurred on only 21.5% of these mortgages.
Former employees of Wells Fargo are supposed to confirm that the company gave their loan officers financial incentives to steer people into subprime mortgages where the interest rates were higher even though they qualified for conventional or FHA mortgages. They frequently told these people to make a minimum down payment. They also encouraged them to state their income and assets rather than to fully document it in the paper work for their mortgages.
The suit contends that as a result of the foreclosures that have been finalized, many homes are now vacant. Squatters have moved into some. There has been an increased risk of fire and crime. This has created additional costs for Memphis and Shelby County.
Property values in these neighborhoods have dropped. This has led to a loss of revenue from real estate taxes for the city and county.
Wells Fargo Also Sued By Baltimore and Illinois
In 2008 Baltimore and the state of Maryland filed a similar suit against Wells Fargo. In August of 2009 the Attorney General of Illinois filed a suit alleging that Wells Fargo targeted people in African-American and Latino neighborhoods in Chicago for subprime mortgages. The interest rates on these were higher. On many of these the foreclosure process has started.
Just last week, January 7 to be exact, a federal judge dismissed the case in Baltimore. The judge said that Wells’ harmful practices on mortgages which had been alleged could not be connected with the damages the city has suffered. It could also not be shown that real estate taxes dropped as a result or that home vacancies rose. Likewise it could not be established that an increase in criminal activity and the higher police and fire department costs stemmed directly from Wells Fargo’s actions.
There are strong similarities between the suit filed by Memphis and Shelby County and the suit in Baltimore. The suit in Illinois is slightly different. It will be interesting to see whether a judge will reach the same conclusion or a decision will be made in Memphis and Shelby County’s favor.
If Memphis and Shelby County win their suit and if the Attorney General wins the suit filed in Illinois, the door will open. Wells Fargo will have no alternative but to agree to modify their loans on virtually all of their subprime loans not only those for African- Americans and Latinos. This will happen nationwide not only in Illinois and Tennessee.
If you are facing foreclosure and if your mortgage is with Wells Fargo, I suggest that you talk to a lawyer or an expert in foreclosures. It would be best for you to be represented by a lawyer or an expert. They can let you know what your options are. They can also guide you in the steps to take to save your home.
I also suggest that you learn as much about the foreclosure process and the options open to you. There is a lot of information in my EBook. You can find out more about it by clicking Stop Foreclosure.
Much Success,
Mark Elkins
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