Wells Fargo between 2004 and 2009
Introduction:
Fair lending practices have been in question since 2004 within what has been known as the housing crisis in the United States. Fair lending refers to any persons with qualified credit standings receiving the same mortgage loan rate percentage of interest to be repaid as the next person. Unfortunately, large loan companies such as Wells Fargo have been accused of inequality in their lending practices in that a person of white, non-Hispanic origin is being offered a better mortgage interest rate and/or paying less in fees than someone of Latino or African-American descent. The fact that this sort of discrimination is occurring from one of the United States’ largest mortgage lending companies is ludicrous. All those living within the United States should be protected under the Fair Housing Act and should not be discriminated against for any reason as states the Declaration of Independence that all men are created equal. The accusations that Wells Fargo has been found in accordance with a pattern of recurring subprime lending practices to discriminate against credit-worthy qualified persons with a non-white origin or background is forthcoming about the nature of the company and has not gone unnoticed by the United States Department of Justice.
Discussion of Accusations and Complaints:
On July 12, 2012, a formal complaint was filed by the United States Department of Justice to state that in between the years of 2004 and 2009, the mortgage lending company, Wells Fargo, had been discriminatory with its lending practices by not allowing a person of African-American origin or a person with a Hispanic origin to be offered the same interest rate in either a residential or a commercial mortgage than someone with a white origin (“United States”, 2014). The complaint also stated that only high mortgage interest rates were being offered and higher fees were being charged to qualified minorities repeatedly (“United States”, 2014). It has been reported that more than 30,000 persons were discriminated against by the Wells Fargo lending company between 2004 and 2009 (O’Toole, 2012).
On September 21, 2012, a consent was filed by the United States Department of Justice in response to the complaint filed against Wells Fargo two months prior (“United States”, 2014). The Attorney General Thomas Perez stated in 2012, after the consent was filed that “if you were African-American or Latino, you were more likely to be placed in a subprime loan or pay more for your mortgage loan, even though you were qualified and deserved better treatment” (O’Toole, 2012). The morals of the Wells Fargo company are clearly in need of an overhaul to properly maintain an equality assurance in all lending practices. The fact that Wells Fargo had been accused of this discriminatory lending practice repeatedly for five years goes to show that they are guilty of inadequacy in prime lending practices and should be reprimanded accordingly.
Results of the Consent filed against Wells Fargo:
According to CNN Money, in 2012, when Wells Fargo was accused of its discriminatory practices in subprime lending, the company denied the allegations against them, but then agreed to settle the case rather than going to court against the United States (O’Toole, 2012). The President of Wells Fargo, Mike Heid, spoke out about the subprime lending accusations, saying that “we believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight, and instead to devote our resources to continuing to contribute to the country’s housing recovery” (O’Toole, 2012). Wells Fargo claims to have ceased all subprime lending practices in 2008, even though they denied the charges altogether, and have agreed to conduct internal reviews of their company in order to sort through any and all issues relating to the subprime lending practices and high fees in query (O’Toole, 2012).
The end result of the consent filed by the United States Department of Justice was that Wells Fargo was mandated to pay $184.3 million in order to repay all persons discriminated against who were pushed into mortgage rates that were subprime and/or had to pay higher fees associated with the mortgage they received (“United States”, 2014). Wells Fargo was also mandated to pay $50 million to assist minorities with subprime mortgage rates in down payments in large communities directly targeted by Wells Fargo discrimination (“United States”, 2014). The people that this discrimination has affected are those of the housing crisis and are deserving of equality in purchasing a home for themselves and their families.
As of this year, 2014, almost all (96%) of those who suffered discriminating charges and subprime mortgage interest rates who chose to participate in the settlement have received sufficient funds compensating them for their losses in high fees and overpaid interest (“United States”, 2014). The United States Department of Justice states that the “distribution of funds is ongoing”. Wells Fargo took advantage of minorities and has paid a price, even though they claim they have done nothing corrupt in their lending practices. The fact that they settled the consent filed against them rather than letting the matter go to trial shows that Wells Fargo was in fact guilty of discriminatory mortgage lending practices. The only reason they conceded was the fact that they had been caught, and there was clearly sufficient enough evidence over the 5 years of accusations that would have most likely resulted in an even larger penalty than the $200 million plus in rectified compensation.
Conclusion:
Wells Fargo is a large lending company that has not been reprimanded enough for the discriminatory acts they have committed. Persons of color should not be discriminated against, especially with the long, drawn out history of the issues of African-Americans owning property in the United States back in the 19th century. All people residing within the United States, who pay taxes and choose to purchase property and receive a loan to do so, should be treated fairly and equally in all aspects of the lending process, especially in the case of a competitive interest rate and fees that are of reasonable amounts in relation to the loan being received. The United States Department of Justice has stood up for all persons living within the United States and has taken measures to rectify the discriminatory situation posed by the lending company Wells Fargo and concluded that all persons should be treated fairly and equally in any way including the process of loans and lending rates.
Even though the victims of the subprime lending rates were compensated or are being compensated by Wells Fargo, the company as a whole should have been reprimanded more by the United States government as well as the United States population. A settlement from the government does do damage to a company such as Wells Fargo, but now, years later, they are still in business and no worse for the wear. Any company, such as Wells Fargo, should be subjected to additional auditing of lending practice patterns in the future to ensure discriminatory practices will not once again, damage the economy or any person’s wellbeing living within the United States choosing to use a loan to purchase property.
References
O’Toole, J. (2012). Wells Fargo in $175M discriminatory lending settlement. CNN Money. Retrieved 23 Dec. 2014 from http://money.cnn.com/2012/07/12/real_estate/wells-fargo lending-settlement/
United States Department of Housing and Civil Enforcement. (2014). Recent Accomplishments of the Housing & Civil Enforcement Section [Data file]. Retrieved 23 Dec. 2014, from http://www.justice.gov/crt/about/hce/whatnew.php
