Mortgage Giant Working to Building a Better Relationship with Latino Community
July 24 2012
By Janis Bowdler, Director, Wealth-Building Policy Project, NCLR
Recently, the Department of Justice (DOJ) settled claims with Wells Fargo related to price discrimination and steering—the practice of putting prime credit borrowers in subprime loans—against Black and Latino borrowers. Earlier research estimated that borrowers of color were more than twice as likely to be steered to subprime loans, even after controlling for credit and other risk characteristics. With a second major fair lending settlement in a year, the DOJ has cemented its role as an incredibly strong ally in the fight against predatory lending. Moreover, the continued march toward greater accountability and transparency in our lending system is worth celebrating.
Wells Fargo has steadily deepened its relationship with NCLR by investing in our foreclosure prevention programs and sharing information on their lending practices and strategy. For example, the bank partnered with the NCLR Homeownership Network to pilot an “Early Resolution Portal,” which allows clients seeking a loan modification to submit their documents online and receive a real-time response, so that they can quickly learn what their modification options are. Wells Fargo is the only bank to use this one-of-a-kind tool, which cuts through the frustrating waiting time for customers and helps to prevent unnecessary foreclosures. The bank also recently helped sponsor and attended the 2012 NCLR Annual Conference, where representatives attended a roundtable discussion with NCLR Affiliates who offered feedback on how the company could improve service in their neighborhoods. Such forums allow NCLR to connect the community directly with bank executives and hold them accountable for commitments made. They also enable the company to review their own practices and ensure that they have the best possible structure and procedures in place to better serve their clients and to avoid future mishaps.
It’s clear—deceptive lending fueled the financial meltdown and the ensuing foreclosure crisis. Since the housing bubble burst, foreclosures have cost thousands of families their homes, absolutely decimating their wealth. And while it is important to remember what led us to that point, it is even more essential that we begin moving forward by rebuilding that wealth and getting Latino families back on the path to economic stability. The settlement reached last Thursday is a step in this direction. Wells Fargo has agreed to pay $125 million to victims that were adversely impacted by its lending practices. In addition, they will provide another $50 million for community improvement projects in seven metropolitan areas that were among the hardest hit by the housing crisis, including Washington, Baltimore, Chicago, Philadelphia, San Francisco, New York City, Cleveland, and Riverside, Calif. And, while this does not erase the devastating economic losses that minority communities and homeowners all across the country experienced, it will provide much-needed relief for borrowers.
No company is perfect. Wells Fargo, like many other banks, made mistakes, and must pay for them. But in the absence of perfection, we need to see a commitment and steady progress in improving services for homeowners and to building relationships with the Latino community. We expect the DOJ to rightfully take further enforcement action against financial institutions who have engaged in predatory lending, and we hope that they too will begin not only to provide monetary relief for borrowers, but also to change their procedures and policies to better serve their customers. In the meantime, NCLR will work with both the DOJ and Wells Fargo to ensure that all families who were harmed are identified and compensated and to advocate for Latino families.