Rulings were recently made in favor of mortgage firms in three lending discrimination lawsuits. Several of the recently active lawsuits involving alleged lending discrimination name units of Wells Fargo & Co. as defendants.
Luxury Mortgage Corp. agreed to a settlement with the Department of Housing and Urban Development, a Nov. 3 statement from the housing agency indicated. Luxury will pay $12,000 to the borrower.
The Stamford, Conn.-based lender was accused of denying a woman a mortgage because she was on maternity leave. The woman claims that she planned to return to work and provided a letter from her employer indicating that she was on paid maternity leave, but Luxury said the letter was inadequate — a move that is prohibited by the Fair Housing Act.
Luxury, which didn’t admit to any violations of law, agreed to amend its lending policy so that pregnant women, women on maternity leave and women on leave for adoption will be approved as long as they qualify.
For the second time in three months, the judge in a federal lawsuit filed by the City of Baltimore accusing Wells Fargo Bank of causing the city’s foreclosure mess because of discriminatory lending has denied Baltimore’s request for an extensive discovery that would burden the bank with providing documentation so the city can construct a regression analysis for loans made over a one-decade period.
“This case is no longer a ‘macro’ one, focusing upon systemic issues, but a ‘micro’ one, focusing upon specific borrowers and properties,” the opinion stated. “As a result, to quote Isaiah Berlin, it is time for counsel and the parties to be ‘foxes,’ rather than ‘hedgehogs,’ viewing the litigation not through the lens of a single defining idea but by considering the variety of facts surrounding the individual borrowers and properties at issue.”
On Sept. 6, U.S. District Judge Maxine M. Chesney denied a motion in litigation against Wells Fargo for class certification by plaintiffs Gilbert Ventura Sr., Tracy D. Ventura, Juan Rodriguez, Howard Queensborough, Ruby Brown and Judy A. Williams. The plaintiffs, whose loans were originated by mortgage brokers and Wells Fargo retail branches, allege that Wells Fargo violated the Fair Housing Act and the Equal Credit Opportunity Act and discriminated against them by giving them loan terms that were less favorable than those given to similarly situated non-minority borrowers as a result of discretionary pricing.
“Plaintiffs allege the loan officers and mortgage brokers were given the discretion to add, with respect to any given mortgage loan, ‘unchecked, subjective surcharge[s]’ of ‘interest rate markups’ and/or ‘points and fees’ to the ‘otherwise objective risk-based financing rate,'” the order stated. “Plaintiffs fail, however, to offer any evidence to show a ‘common mode of exercising [such] discretion.'”
In her decision, Chesney cited a recent U.S. Supreme Court ruling in Wal-Mart Stores Inc. v. Dukes.
Illinois Attorney General Lisa Madigan originally announced in July 2009 that a lawsuit was filed in Cook County Circuit Court against Wells Fargo and Co.; Wells Fargo Bank, N.A., also doing business as Wells Fargo Home Mortgage; and Wells Fargo Financial Illinois Inc. The complaint alleges that the company illegally discriminated against African American and Latino borrowers by selling them high-cost subprime mortgages while white borrowers with similar incomes received lower cost loans.
Last month, Cook County Judge Carolyn Quinn ruled that the state can move forward with its reverse-redlining lawsuit, the Wall Street Journal reported. The case is reportedly the first fair-lending lawsuit brought by a state attorney general against a national bank to reach discovery.
Change.org announced this month a campaign calling for the Minneapolis School Board to move its payroll and bank accounts from Wells Fargo Bank, N.A., to other local community banks. The group, which claims that more than 8,000 have joined the campaign, accuses Wells Fargo of being responsible for 20 percent of Minneapolis foreclosures — causing student enrollment to plummet and schools to close.
“Wells Fargo is responsible for nearly 20 percent of the foreclosures in this town, as well as making a disproportionate number of equity-stripping subprime loans to people of color in Minneapolis,” Steve Fletcher, executive director of Neighborhoods Organizing for Change, said in the announcement.
Wells Fargo & Co. is the biggest U.S. mortgage lender based on quarterly data compiled by MortgageDaily.com.
A class-action lawsuit filed on Sept. 22 in U.S. District Court for the District of New Jersey against 1st 2nd Mortgage Company of New Jersey Inc. alleges that loans were made to borrowers at higher rates and worse terms than originally promised. The company is accused of violating the Truth in Lending Act and Regulation Z, the Real Estate Settlement Procedures Act, the Home Ownership and Equity Protection Act and the Fair Credit Reporting Act, among other laws.
According to the complaint, 1st 2nd preyed on uneducated, non-English speaking immigrants with little or no assets. Borrowers were given up to 100 percent financing, with little or no downpayment required, and were unable to repay the loans. Adjustable-rate mortgages with skyrocketing or balloon payments were utilized. The lawsuit suggests that the borrowers should not have been given loans.
The Department of Justice announced on Sept. 30 that it settled allegations of lending discrimination with C&F Mortgage Corp. The settlement was filed in conjunction with a complaint filed by the Justice Department’s Civil Rights Division in U.S. District Court for the Eastern District of Virginia. As part of the agreement, the Midlothian, Va.-based company will revise its pricing policies, conduct employee training and pay $140,000 to black and Hispanic borrowers.
C&F is accused of increasing overages and providing lesser discounts to minority borrowers in violation of the Fair Housing Act and ECOA. In 2007, the company allegedly used a rate charge based on credit risk then gave employees discretion on pricing the loans. Before last year, C&F didn’t require documentation justifying the reasons it charged some customers more than others.
The judge in a case filed in U.S. District Court for the Western District of Kentucky by Bernice Smith, German Pena and Sonia Jenkins against Countrywide Home Loans Inc. denied class certification, the Associated Press reported. Countrywide is accused enabling loan originators and mortgage brokers to charged African-American and Hispanic borrowers more for home loans than non-minority borrowers.
