Wells Fargo Sub Prime Discrimination

[ClosedCaption]

Wells Fargo agrees to $175 million settlement in pricing discrimination suit - Baltimore Sun

The city alleged Wells Fargo steered minorities into subprime loans, gave them less favorable rates than white borrowers and foreclosed on hundreds of Baltimore homes, creating blight and higher public safety costs. Wells Fargo is the largest residential home mortgage originator in the United States.

The settlement provides $125 million in payments to borrowers, including an estimated $2.5 million in the Baltimore area. Minority borrowers who were steered into subprime mortgages will receive an average payment of $15,000 each, Perez said. Blacks and Hispanics who paid higher fees and rates than white borrowers because of their race or national origin will receive smaller payments that will be determined based on what they were charged.

The Justice Department's lawsuit alleged the bank discriminated against African-American and Latino borrowers between 2004 and 2009. The federal government said that black and Hispanic residents were more likely to be placed in a subprime loan than their white counterparts even if they qualified for a better loan.

"That's called discrimination with a smile," Perez said.

At a news conference at City Hall, he told a story about an "80-year-old African-American resident of the Baltimore area with a 714 credit score and a rock-solid credit file who received a subprime loan instead of a prime loan, and who was not told that she may have qualified for a prime loan with better terms."

"By the time she realized she had an adjustable-rate mortgage, and not the fixed rate she thought, it was too late," Perez said. "The damage was done."

While people try to blame the Minorities by claiming they were just being greedy wanting homes they couldnt afford. The facts tell a different or at least alternative story that gets ignored

 

[ClosedCaption]

I know..ignore it and it will cease to exist

 

[g5000]

Whites with high credit scores were also pushed into subprime loans. The profits from a subprime loan are higher.

I have an over 800 credit rating and a broker tried to push me into a subprime loan so toxic that I actually called a friend in the media to investigate what was going on in the lending business. Too bad she did not understand the ins and outs of mortgage financing or she would have been years ahead of the curve on reporting about the coming crash. Instead, she ignored what I was telling her.

I wish I could see the evidence that was presented which suggests this was done to blacks more than whites. I am sure a lot of math and statistics were involved in "proving" this was the case, but I don't have much faith in juries being able to understand when they are being bullshitted.

I think this was regular practice across the board, not just with minorities. All you have to do is drive around town in the white neighborhoods and look at all the foreclosures and For Sale signs to see the derivatives bubble was color-blind when it came to creating toxic assets.

In any case, this is just one more nail in the already dead CRA meme's coffin.

 

[ClosedCaption]

Wells Fargo didnt think so...These actions possibly destroyed the economic progress many minorities have made over the years and viola! Wells throws money at it and says "my bad" with an even bigger bag of money slung over their shoulder

 

[Wacky Quacky]

Buying a home isn't rocket science, but it is a large enough of a purchase and investment to warrant researching a little bit before doing it. If you're not rich then the first words out of your mouth when you walk into a realtor's office should be "30 year fixed".

People are going to continue to be taken advantage of more and more. A few lawsuits or laws won't change that. Businesses know that americans are becoming less and less knowledgeable about simple finances, and they're using that to their advantage. Does that mean businesses are to blame? Somewhat. More of the blame lies with an ever growing populace of apathetic and ignorant people.

Don't want to be taken advantage of? Do some research before making major financial decisions, it's that easy. Google is your friend.

 

[ClosedCaption]

Buying a home isn't rocket science, but it is a large enough of a purchase and investment to warrant researching a little bit before doing it. If you're not rich then the first words out of your mouth when you walk into a realtor's office should be "30 year fixed".

People are going to continue to be taken advantage of more and more. A few lawsuits or laws won't change that. Businesses know that americans are becoming less and less knowledgeable about simple finances, and they're using that to their advantage. Does that mean businesses are to blame? Somewhat. More of the blame lies with an ever growing populace of apathetic and ignorant people.

Don't want to be taken advantage of? Do some research before making major financial decisions, it's that easy. Google is your friend.

If you researched a bit you would know that you dont go to a realtor for a loan. That is done by a lender.

The lender never told some of these people that they could qualify for a better loan. You're right, average citizens should know what lenders know except there is no way to know that unless you are a lender in most cases.

 

[Wacky Quacky]

Buying a home isn't rocket science, but it is a large enough of a purchase and investment to warrant researching a little bit before doing it. If you're not rich then the first words out of your mouth when you walk into a realtor's office should be "30 year fixed".

People are going to continue to be taken advantage of more and more. A few lawsuits or laws won't change that. Businesses know that americans are becoming less and less knowledgeable about simple finances, and they're using that to their advantage. Does that mean businesses are to blame? Somewhat. More of the blame lies with an ever growing populace of apathetic and ignorant people.

Don't want to be taken advantage of? Do some research before making major financial decisions, it's that easy. Google is your friend.

If you researched a bit you would know that you dont go to a realtor for a loan. That is done by a lender.

The lender never told some of these people that they could qualify for a better loan. You're right, average citizens should know what lenders know except there is no way to know that unless you are a lender in most cases.

Then they should have went to a different lender. If that lender said the same thing then obviously they can't afford a home. If you can't qualify for a 30 year fixed then how in hell do think you'll afford an ARM?

 

[g5000]

You can put a person in a bigger house with a subprime loan than you can with a 30-year fixed loan. A bigger house means a bigger loan which means bigger profits.

And the bigger your paycheck, the bigger subprime loan you could be put into. That's why the primary target was the middle class, not minorities.

The subprime lending business was also pushed to help revitalize the lagging refinancing industry. Get someone into a loan that resets in three years and they have to refinance. Mo' money! Mo' money!

June 2003: Not exactly prime: the secondary market for loans not in prime condition is growing.

Wall Street has gotten involved in subprime securitization "in a very large way," says Brendan Keane, managing director of CS First Boston, New York. * CSFB and many of its peers on Wall Street have become subprime buyers in recent years. The group includes Merrill Lynch, Lehman Bros., Morgan Stanley, Greenwich Capital, UBS and Bank of America. More recently, Goldman Sachs has entered the competition through its purchase of Household International's collateral, which it securitized for the firm.

All this investor interest in subprime loans is propelled by the mountain of money piling up on the sidelines of the stock market, fearing entry into that uninviting terrain.

"Mutual funds, hedge funds, private-equity funds are sitting on a tremendous amount of liquidity," says Kenneth Slosser, managing director of investment banking at Friedman, Billings, Ramsey & Co., Inc., Irvine, California.

For the past several years, money has been flowing into subprime securitizations. Secondary market purchases of alternative-A loans, high-loan-to-value (LTV) loans, home-equity lines of credit, "scratch-and-dent loans" and other nonconforming products totaled $160 billion in 2002, according to CS First Boston. That was 77 percent higher than in 2001. This year, CSFB reports activity could top out at $200 billion, another 25 percent increase.

Meanwhile on the origination front, subprime lending is estimated to have grown threefold in the past decade. Data cited by syndicated housing columnist Ken Harney at the recent Subprime Lending Conference sponsored by the Mortgage Bankers Association of America (MBA) pegged this slice of the market at 15 percent of all mortgage originations. That's up from 5 percent in 1994.

According to data from CSFB, it led the securitizing pack last year with $9.6 billion in subprime loan transactions, followed by Lehman Bros. with $9.5 billion and Morgan Stanley with $8.7 billion.

Bradley Brunts, managing director of capital markets for CitiMortgage Inc., St. Louis, agrees with Posner about the difficulty in defining what the GSEs will want to buy. "[N]onprime is becoming just Like the prime business," he says. As a result, "we're going to continue to see shrinking margins to a certain degree. The GSEs have a huge appetite to grow, [and] this is a wide margin product--so it's no surprise they'll be going after [it]," he says.

It stands to reason, adds Brunts, that "as you get more people into the [subprime] space ... the margins are going to shrink. The distinction between an originator of what is today a subprime product and a prime product is going to continue to blur."

Brunt predicts that "the big survivors are those who can deliver and respond to borrowers across the credit spectrum, and have the outlets to deliver that product into the secondary market."

There's the if-we-don't-do-it-the-other-guy-will mentality right there that fed the whole bubble in that last sentence.


Option ARM & Fixed Rate Cash Flow Mortgage

Option ARM is a general name for a category of mortgages which are also marketed as Pay Option, Cash Flow ARM, Fixed Rate Option ARM, Smart Choice, Pick a Pay, Secure Advantage, 1 Month MTA and many other names. The family of mortgages to which Option ARM loans belong has long been a favorite of higher net worth individuals, business owners, and real estate investors under the names "Payment Cap ARM", "Deferred Interest Mortgage" and "Negative Amortization Loan", however their popularity has exploded due to much more widespread availability over the past 5 years. Once a specialized financial tool of the wealthy, Option ARM mortgages now come in an impressive variety of shapes and sizes.

http://www.nytimes.com/2006/07/15/business/15money.htm

Someone now paying $350 a month for a $100,000 interest-only loan could be facing payments of $680 both because of the shift to the higher rate and because the borrower would have to start paying off the principal as well as the interest.

“You need a couple of good pay raises in order to afford it,” said Mark Fleming, chief economist with CoreLogic, which develops risk models for the mortgage lenders. “It’s pretty hard to deal with a payment shock of 80 percent or 90 percent,” he said.

The mortgage industry is not worried about payment shock. Why?

“It offers an opportunity,” said Brad Brunts, managing director of portfolio management at Citi Mortgage, a unit of Citigroup.

He, like others in the mortgage industry, sees the higher payments as a boost to the flagging mortgage refinancing business.

You may want to bookmark this post for the next time some idiot bongwater guzzler says, "It wuz da CRA!"

 

[eflatminor]

Wells Fargo agrees to $175 million settlement in pricing discrimination suit - Baltimore Sun

The city alleged Wells Fargo steered minorities into subprime loans, gave them less favorable rates than white borrowers and foreclosed on hundreds of Baltimore homes, creating blight and higher public safety costs. Wells Fargo is the largest residential home mortgage originator in the United States.

Alleged...that's easy.

The settlement provides $125 million in payments to borrowers, including an estimated $2.5 million in the Baltimore area. Minority borrowers who were steered into subprime mortgages will receive an average payment of $15,000 each, Perez said. Blacks and Hispanics who paid higher fees and rates than white borrowers because of their race or national origin will receive smaller payments that will be determined based on what they were charged.

Any proof to this accusation? Sounds like Wells is playing PC to avoid a court battle, which the MSM would ensure would be ugly, ugly, ugly.

The Justice Department's lawsuit alleged the bank discriminated against African-American and Latino borrowers between 2004 and 2009. The federal government said that black and Hispanic residents were more likely to be placed in a subprime loan than their white counterparts even if they qualified for a better loan.

What kind of dumbshit allows themselves to get a subprime loan when they qualify for better terms? Whatever happened to caveat emptor?

"That's called discrimination with a smile," Perez said.

At a news conference at City Hall, he told a story about an "80-year-old African-American resident of the Baltimore area with a 714 credit score and a rock-solid credit file who received a subprime loan instead of a prime loan, and who was not told that she may have qualified for a prime loan with better terms."

"By the time she realized she had an adjustable-rate mortgage, and not the fixed rate she thought, it was too late," Perez said. "The damage was done."

Wow, that guys sounds like an idiot. Who takes out a loan without knowing the terms? Who doesn't get multiple quotes from various banks? Geez, if you really can't handle the loan process, you probably shouldn't own a home. Renting isn't wrong.


While people try to blame the Minorities by claiming they were just being greedy wanting homes they couldnt afford. The facts tell a different or at least alternative story that gets ignored

Nobody's blaming minorities for the housing meltdown. We're blaming government regulations, the federal reserve, tax laws, loopholes, etc...but not minorities. Sorry if the truth doesn't fit your agenda.

 

[Moonglow]

you left out the bankers, they are part of the problem

 

[WillowTree]

Wells Fargo agrees to $175 million settlement in pricing discrimination suit - Baltimore Sun

The city alleged Wells Fargo steered minorities into subprime loans, gave them less favorable rates than white borrowers and foreclosed on hundreds of Baltimore homes, creating blight and higher public safety costs. Wells Fargo is the largest residential home mortgage originator in the United States.

The settlement provides $125 million in payments to borrowers, including an estimated $2.5 million in the Baltimore area. Minority borrowers who were steered into subprime mortgages will receive an average payment of $15,000 each, Perez said. Blacks and Hispanics who paid higher fees and rates than white borrowers because of their race or national origin will receive smaller payments that will be determined based on what they were charged.

The Justice Department's lawsuit alleged the bank discriminated against African-American and Latino borrowers between 2004 and 2009. The federal government said that black and Hispanic residents were more likely to be placed in a subprime loan than their white counterparts even if they qualified for a better loan.

"That's called discrimination with a smile," Perez said.

At a news conference at City Hall, he told a story about an "80-year-old African-American resident of the Baltimore area with a 714 credit score and a rock-solid credit file who received a subprime loan instead of a prime loan, and who was not told that she may have qualified for a prime loan with better terms."

"By the time she realized she had an adjustable-rate mortgage, and not the fixed rate she thought, it was too late," Perez said. "The damage was done."

While people try to blame the Minorities by claiming they were just being greedy wanting homes they couldnt afford. The facts tell a different or at least alternative story that gets ignored

nOBODY and I mean NObody was forced to sign a subprime loan and that includes minorities.

 

[g5000]

Nobody's blaming minorities for the housing meltdown.

Actually, there are a lot of people who blame minorities for the meltdown. Just google "Community Reinvestment Act subprime mortgage crisis" and see for yourself.

We have them right here on this forum, too. Every political forum has them.

Since this topic involves minorities and subprime loans, I am simply pre-empting them with the real facts of the global derivatives bubble.

We're blaming government regulations, the federal reserve, tax laws, loopholes, etc...but not minorities. Sorry if the truth doesn't fit your agenda.

I notice you failed to mention financial institutions and Wall Street.

Interesting.

And it was a lack of regulations, not regulations, which contributed to the meltdown.

 

[eflatminor]

Nobody's blaming minorities for the housing meltdown.

Actually, there are a lot of people who blame minorities for the meltdown. Just google "Community Reinvestment Act subprime mortgage crisis" and see for yourself.

We have them right here on this forum, too. Every political forum has them.

Since this topic involves minorities and subprime loans, I am simply pre-empting them with the real facts of the global derivatives bubble.

We're blaming government regulations, the federal reserve, tax laws, loopholes, etc...but not minorities. Sorry if the truth doesn't fit your agenda.

I notice you failed to mention financial institutions and Wall Street.

Interesting.

And it was a lack of regulations, not regulations, which contributed to the meltdown.

The CRA was enacted by politicians of various races I suspect.

Bullshit on a "lack of regulations". The government adds thousands of regulations to the federal register every year, while rarely removing any. But I get it, you're a big gov nanny stater, where there is NEVER enough gubmint oversight.

 

[Stephanie]

More extortion by this administration

 

[Wacky Quacky]

Nobody's blaming minorities for the housing meltdown.

Actually, there are a lot of people who blame minorities for the meltdown. Just google "Community Reinvestment Act subprime mortgage crisis" and see for yourself.

We have them right here on this forum, too. Every political forum has them.

Since this topic involves minorities and subprime loans, I am simply pre-empting them with the real facts of the global derivatives bubble.

We're blaming government regulations, the federal reserve, tax laws, loopholes, etc...but not minorities. Sorry if the truth doesn't fit your agenda.

I notice you failed to mention financial institutions and Wall Street.

Interesting.

And it was a lack of regulations, not regulations, which contributed to the meltdown.

The CRA was enacted by politicians of various races I suspect.

Bullshit on a "lack of regulations". The government adds thousands of regulations to the federal register every year, while rarely removing any. But I get it, you're a big gov nanny stater, where there is NEVER enough gubmint oversight.

It's not about "to many" or "not enough" regulations. That's a false argument. It's about "the right kind" of regulations. We had a lack of the right kind of regulations.

 

[g5000]

Bullshit on a "lack of regulations". The government adds thousands of regulations to the federal register every year, while rarely removing any. But I get it, you're a big gov nanny stater, where there is NEVER enough gubmint oversight.

During the derivatives bubble, Bush increased regulations for every agency except two, which he actually reduced. Guess which two.

The SEC and the EPA.

In addition, the CFMA and the FSMA completely deregulated derivatives.

Take a look at section 117 of the CFMA:

This title shall supersede and preempt the
application of any State or local law that prohibits or regulates
gaming or the operation of bucket shops (other than antifraud provisions
of general applicability) in the case of—
(1) a hybrid instrument that is predominantly a banking
product; or
(2) a covered swap agreement.

Now ask yourself, why did BANKS need to be exempted from GAMING laws?

And look up what a bucket shop is and ask yourself why a broker-dealer on Wall Street needed to be exempt from laws forbidding bucket shops.

Things that make you go hmmmmmmmm...

Take a good look at the language of that section and notice the federal government usurps the states' powers. And yet not one Republican bitched about the Tenth Amendment and the violation of states rights!!!

To this day, no one from the Right bitches about it (except me). Certainly not around here.

Probably because Rush and Sean and Glenn are silent about it. They can't parrot what they don't know.

More things that make you go hmmmmmmmm...

 

[ClosedCaption]

Buying a home isn't rocket science, but it is a large enough of a purchase and investment to warrant researching a little bit before doing it. If you're not rich then the first words out of your mouth when you walk into a realtor's office should be "30 year fixed".

People are going to continue to be taken advantage of more and more. A few lawsuits or laws won't change that. Businesses know that americans are becoming less and less knowledgeable about simple finances, and they're using that to their advantage. Does that mean businesses are to blame? Somewhat. More of the blame lies with an ever growing populace of apathetic and ignorant people.

Don't want to be taken advantage of? Do some research before making major financial decisions, it's that easy. Google is your friend.

If you researched a bit you would know that you dont go to a realtor for a loan. That is done by a lender.

The lender never told some of these people that they could qualify for a better loan. You're right, average citizens should know what lenders know except there is no way to know that unless you are a lender in most cases.

Then they should have went to a different lender. If that lender said the same thing then obviously they can't afford a home. If you can't qualify for a 30 year fixed then how in hell do think you'll afford an ARM?

Hows it feel to live in Hindsightland?

 

[ClosedCaption]

Wells Fargo agrees to $175 million settlement in pricing discrimination suit - Baltimore Sun

The city alleged Wells Fargo steered minorities into subprime loans, gave them less favorable rates than white borrowers and foreclosed on hundreds of Baltimore homes, creating blight and higher public safety costs. Wells Fargo is the largest residential home mortgage originator in the United States.

"That's called discrimination with a smile," Perez said.

At a news conference at City Hall, he told a story about an "80-year-old African-American resident of the Baltimore area with a 714 credit score and a rock-solid credit file who received a subprime loan instead of a prime loan, and who was not told that she may have qualified for a prime loan with better terms."

"By the time she realized she had an adjustable-rate mortgage, and not the fixed rate she thought, it was too late," Perez said. "The damage was done."

While people try to blame the Minorities by claiming they were just being greedy wanting homes they couldnt afford. The facts tell a different or at least alternative story that gets ignored

nOBODY and I mean NObody was forced to sign a subprime loan and that includes minorities.

Your point is what? They were tricked and fell for the trick. This is like when someone gets conned and no one blames the con man just the victim.

 

[eflatminor]

Take a good look at the language of that section and notice the federal government usurps the states' powers. And yet not one Republican bitched about the Tenth Amendment and the violation of states rights!!!

We Libertarians sure as hell did.

 

[Wacky Quacky]

If you researched a bit you would know that you dont go to a realtor for a loan. That is done by a lender.

The lender never told some of these people that they could qualify for a better loan. You're right, average citizens should know what lenders know except there is no way to know that unless you are a lender in most cases.

Then they should have went to a different lender. If that lender said the same thing then obviously they can't afford a home. If you can't qualify for a 30 year fixed then how in hell do think you'll afford an ARM?

Hows it feel to live in Hindsightland?

I don't. First house I bought was on a 30 year fixed, and the cost was low enough so that even if I lost my job me and my wife would be okay. We played it safe and smart. Just because the lender said we were approved for a $150,000 loan, doesn't mean we ran out and bought a $150,000 home.

I would say that this should be taught in school, but given the attention level of kids today it would be a waste of time. All I know is that my kids will be expertly prepared to handle their own finances when they grow up and move out.