TheLoop21.com

By: Devona Walker (Add to your loop)
Tue, 06/23/2009 - 00:00

Tavis Smiley should speak out against Wells Fargo's predatory lending.

The financial implications of subprime lending on cities like Baltimore, Oakland, Cleveland and Detroit have been devastating. The effect on the black community nationally has been the single most financially devastating event in United States history. Oakland, Calif., faces a $100 million deficit, and Baltimore has actually filed suit against one of the largest companies in the city, Wells Fargo.

Wells Fargo has clearly targeted black homeowners for years with predatory loans and contributed to billions of dollars in lost wealth in the black community. But yet a man cited as an emerging leader in the black community, has not severed ties with the corporate bank. In 2005, when Tavis Smiley went on his whole "empowering" the black community tour, Wells Fargo footed the bill. Interestingly enough, one of the key components of the tour was promoting home ownership in the black community which happened to coincide with Wells Fargo's need to gain access into the black community to market its subprime loan division. In Smiley, they found an inspirational, if not an official, pitch man.

I don't fault Smiley for what happened back then. Few of us had the clarity to fully understand what lenders like Wells Fargo were really up to when they started showing up in the black community.

But now? Everyone knows. And now, Smiley should man up, cut the purse strings and issue a sincere apology.

We've written about how Wells Fargo loan officer Tony Paschal, a black man, said Wells Fargo frequently called subprime loans "ghetto loans" and their black subprime customers "mud people."

Today, we are pushing that story forward by informing you that loan officers frequently and fraudulently told these black customers that sub prime was sometimes their only option. In an affidavit, Paschal and another prominent Wells Fargo loan officer, Elizabeth Jacobson, wrote that, the lender had an unwritten policy of omitting information concerning fees and penalties but instead sold black people on the more expensive loans by saying it would simply mean less paperwork, less documentation and a lower down payment.

And what is most damaging to Wells Fargo, and Smiley as far as that is concerned, is the rampant amount of fraud going on in order to give blacks loans they could not afford. The bank in fact set up an entire division, called the mortgage resources division or MORE, that was designed to target black ZIP codes. In this division, loan officers were only allowed to authorize subprime loans. They received incentives for steering prime customers into subprime products and they were reportedly reprimanded when they didn't, according to court reports.

Wells Fargo actions in places like Baltimore and Prince George's County, Md., if proven to be true, are shocking, according to Eric Halperin, director at the Center for Responsible Lending.

"I have never seen anything quite like it," Halperin said of testimony surfacing in a lawsuit the city of Baltimore brought against Wells Fargo.