Federal Charter to Keep Wells Funding Calif Mortgages After License Suspension

ACORN sues Wells Fargo Financial

June 10, 2004

By MortgageDaily.com staff

ACORN, a self-proclaimed advocate of low- and moderate-income families, plans to announce today the filling of a class action suit against Wells.

At issue are loans with interest rates above 8% that have fees greater than 3% — a violation of Illinois state law, according to ACORN. Many of Wells’ recently originated high rate loans allegedly have fees of as much as 10%.

“A recent state court of appeals decision (US Bank v Bankers Trust Co.), has upheld the Illinois law under which the suit is being brought,” ACORN said in the announcement.

Wells could wind up paying twice the finance charge on the loans, ACORN said, as mandated by state law.

“Wells has gotten away with unfair, abusive, and illegal lending in our communities for years,” ACORN president Maude Hurd said in the statement. “This lawsuit lets us demand that the excess fees and finance charges Wells has been sucking out of our communities need to be returned to the people they were taken from.”

ACORN started its campaign against Wells a year ago. Wells initially dismissed ACORN as a “nuisance,” but subsequently saw the resignation of the subprime unit’s chief.

Last year, Well’s had its California lending license revoked. But the lender held out that it was not subject to the state’s lending laws because it is a federally chartered bank. “The comptroller’s office has confirmed to us unequivocally that under its regulations, California licenses are not required to conduct our mortgage business in California,” said the company’s CEO at the time.

ACORN claims Wells is being investigated by state regulators in Illinois, Louisiana and Maryland.

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OCC Vs. States; Opponents of Federal Preemption Talk
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Federal Charter to Keep Wells Funding Calif Mortgages After License Suspension
California’s finance authority announced that it’s intending to revoke the residential mortgage lending license of Wells Fargo Home Mortgage, Inc. because of repeated violations of state code, according to the Department of Corporations. However, Wells said it doesn’t have to respond to the agency’s instruction because Wells is a federally chartered bank, and federal law preempts state law.