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VOL. 126 | NO. 88 | Thursday, May 5, 2011

Federal Judge Denies Local Wells Fargo Suit Dismissal

By Andy Meek

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One week after a federal judge in Baltimore denied an effort by Wells Fargo to dismiss that city’s mortgage discrimination lawsuit against the lender, a federal judge in Memphis has done the same thing.

U.S. District Judge S. Thomas Anderson has denied a motion by Wells to dismiss a lawsuit Memphis and Shelby County jointly filed against Wells in late 2009. That means both governments can now move forward with their suit that alleges Wells improperly pushed black borrowers into high-cost loans.

The suit also claims black homeowners were targeted for burdensome refinance and home equity loans.

“The court holds that plaintiffs have alleged sufficient facts to establish standing to pursue claims for violations of the Fair Housing Act and the Tennessee Consumer Protection Act,” Anderson wrote in his ruling. “Additionally, plaintiffs have adequately pled their claim that Wells Fargo’s lending practices had a disparate impact on African-Americans in Memphis and Shelby County in violation of the FHA.”

The local lawsuit against Wells has been pending for almost a year and a half. The city and county announced its filing of a more than 50-page suit at a December 2009 press conference against the backdrop of the National Civil Rights Museum.

Memphis Mayor A C Wharton Jr. traveled to Washington in early 2010 and personally laid out the city-county case for Tom Perez, the assistant U.S. attorney general who heads the U.S. Justice Department’s civil rights division.

Also in early 2010, Wharton laid out the city’s case against Wells in testimony he gave in Washington to a judiciary subcommittee of the U.S. House of Representatives.

Webb Brewer, one of the Memphis attorneys representing the city and county against Wells, said he and his colleagues believe they can identify thousands of loans that went to foreclosure that involved either black borrowers steered into inappropriately high-cost loans or unaffordable refinances and home equity loans.

“Many of these foreclosures have remained vacant, for long periods at a high cost to the local governments,” Brewer said.

In response to the Baltimore decision, Wells Fargo spokeswoman Vickee Adams told The Daily News that Wells Fargo team members make loan pricing decisions based on credit and transaction risks, approving mortgage loan applications when the borrower has the ability to repay the loan.

“The Home Mortgage Disclosure Act report of 2009, the most recent data available, shows that Wells Fargo was the No. 1 originator of home loans overall and in each of the following categories: African-Americans, Asians, Native Americans, and residents of low- and moderate-income neighborhoods,” Adams said. “We were the second largest originator of home loans to Hispanic borrowers.

“Finally, in addition to the community partnerships and materials that we develop for homebuyers, the bottom line is from January 2009 through February 2011 we have assisted 649,075 customers facing financial hardship with a trial or completed loan modification, 14 percent of which were under the federal government’s Home Affordable Modification Program (HAMP).”

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 76 133 1,342
MORTGAGES 83 131 1,047
FORECLOSURE NOTICES 0 11 162
BUILDING PERMITS 0 87 2,838
BANKRUPTCIES 39 73 691
BUSINESS LICENSES 0 10 286
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0