Secrets of the City

Ever see a Western with a Hispanic, an African American or a Native American riding in the stagecoach? No? Me either.

Maybe this policy goes back further than we know…

I call shenanegins until they can present more numbers on what their market share is like in those states. It might just happen that well-off white people don’t like WF for loans there, and most of their customer base is poorer black folk.

Not that suckering anyone into a loan they can’t afford is ok, but then you can’t force them to sign it either. There’s plenty of blame to go around, but let’s make sure we have proper numbers before accusing a giant bank of institutionalized racism.

I mean, of course it’s happened before (blacklisting inner-cities for loans and only offering them for new construction in the suburbs anyone?), but you should still be really really sure before you start throwing accusations.

Also, ugh, why do I have to slow people down from hating on a bank? gross.

Oh I want to throw in too that they say: “In Chicago, the city to suffer from the biggest racial disparities, 35 percent of African-Americans received high-cost loans (again, regardless of income)”
Let’s not forget that a lot more goes into one’s credit rating than just income. Maybe someone makes decent money but hasn’t paid their $15,000 in credit card bills off? Should they get the same home loan as someone who makes the same amount of money and pays their bills on time?

I also call BS. The ‘non-partisan’ advocates are trying to have it both ways. If you deny loans to a population, thats redlining. If you ‘target’ them in some form of marketing campaign, thats supposed to be exploitive. Wells is damned if they do and damned if they don’t.

Wells may very well have some mechanism in their loan underwriting that subjects applicants to greater scrutiny – regardless of income. Thats a good business practice. In all thats been published about the housing crisis, isnt it generally accepted that lax underwriting standards, the willingness to loan to anyone without income documentation, was a primary cause? Wells is weathering the housing crisis pretty good, and is one of the largest originators in the country.

I dont work for Wells, I’m not in the mortgage business. I just think its silly to make some argument they engage in racisim like this.

I think I’d much rather have a sub prime loan from Wells than TJ Waconia.

The absence of substantial competition from prime lending institutions in many minority markets is a
contributing factor to the relative dearth of low-cost credit in these communities. Many communities with
concentrations of higher-cost loans have few bank branches.

In other words, there were not as many choices for lower cost loans in some of these minority markets? They had no choice for lower cost loans?

I noticed what wayno noticed… that the story says “regardless of income,” instead of “regardless of credit rating.”

not supposed to be question marks on my statement.

Also, look at who commissioned this study. Agenda?

sloppy stats make the baby wayne cry

Wayne’s right. Say I make $40k per year and have an outstanding credit balance of under $2k (with a $25k credit limit). The loan rate offered to me then will be far better than if I were still making that same $40k per year but had a $20k credit balance (and the same $25k credit limit).

I really wish some reporters would take a bit of extra time to truly understand the topics they write about. It’s so knee-jerk to claim “racism” (or any -ism) when the true facts might otherwise point in a different, more personal direction.

I should start a blog that does nothing but debunk/question sloppy stats in reporting

I love how you all jump to conclusions that these people ALL had bad credit. Look at the report if you want. It is right there on the page. Wells Fargo was ten times more likely to offer African-Americans high-cost loans. Most banks in the report were maybe two times more likely. What a ridiculous assumption that Wells customers were nine times more likely than THOSE customers to have bad credit. Come on.

These aren’t really reporters that produced this. They’re advocacy groups, and theyre trying to damage Wells reputation so that Wells responds by funding non profit community initiatives. Wells is a good business, but its big, and carries the reputational baggage banks have always carried. So its an easy target. This is extortion basically.

Minnesota Monitor is complicit, but theyre not unbiased. Theyre a George Soros funded left wing mouthpiece.

No big deal. If the Strib ran this it would be completely irresponsible.

I would read that, wayno.

“I love how you all jump to conclusions that these people ALL had bad credit.”

Nobody said that. They noted that credit history was not mentioned in the story, and know it to be the biggest factor in obtaining a competitive mortgage.

From the report: In these six metropolitan areas, African American borrowers were 3.8 times more likely to receive
a higher-cost home purchase loan than were white borrowers.

Wells Fargo, however, was 10 times more likely. If you still think they’re innocent, then your knee-jerk ideology has made you completely blind.

molly, we didn’t assume anything other than the people behind the study/story assumed some things that may not be true. if they could pull the numbers and show that all of those people had roughly the same credit as the white folks who got good loans, you’re on your way to proving something. but they’re just using income-equity to say “ZOMG RACIST!” without even examining any other circumstances which might be behind it, and with something like loans credit history is a really obvious place to look (yet somehow they don’t mention anything about it here).

From the report: In these six metropolitan areas, African American borrowers were 3.8 times more likely to receive
a higher-cost home purchase loan than were white borrowers.

Wells Fargo, however, was 10 times more likely. If you still think they’re innocent, then your knee-jerk ideology has made you completely blind.

Ok that said what is the average credit score of a African American in the U.S. and in each of the cited cities. The Lehr hour had this on a week or so ago about Baltimore. This is complete bullshit. Acorn and groups like a few years ago where screaming racism because home ownership in “minority” communities were not equal to that of white people. You do not get your cake and eat it too. Lending institutions lend based on credit scores if you have shitty credit you get a shitty loan. Furthermore, no one made anyone sign up for a mortgage and no one made anyone buy a bunch of shit with the equity in their home. This is a cop out by the cities that encouraged lending institution to lend in minority communities. Acorn and groups like that have been accusing banks of “redlining” for years. The solution was not to lend in certain neighborhoods but that is illegal too. Keep this up and no one is going to get credit in this country. Banks are for profit institutions not a welfare system. If you do not have a good credit score too bad so sad that is your problem no one Else’s. A credit score is earned and it is not based on race.

They studied Truth in Lending reports, which doesn’t list credit ratings. In fact, it’s questionable in and of itself that these financial institutions are not required to list the credit ratings of borrowers in the report, given it’s impact on pricing.

However, it is a totally weak argument to conclude that all of these customers had poor credit ratings. Come on. They were nine times more likely than Citigroup black customers to have poor credit?

These companies engaged in green-lining all over the country: They went after minority neighborhoods and specifically marketed high-cost loans to them.

Yet evidence suggests that weak borrower credit profiles do not fully explain why some borrowers get
stuck with higher-cost home loans. The Government Sponsored Enterprises, Fannie Mae and Freddie
Mac, have estimated that many subprime borrowers could have qualified for lower-cost prime loans.
Recent public enforcement actions by state Attorneys General have alleged that certain large national
subprime lenders were inappropriately charging borrowers more than their credit profiles warranted.
Additionally, research by consumer groups have used private credit scoring data to show that loan pricing
disparities remain even after controlling for differences in credit scores.11 Finally, consumer advocates
continue to request that credit score information be made publicly available, while industry groups
continue to vehemently resist such disclosure. The lack of such public data makes it impossible to verify
industry claims that the large disparities in levels subprime lending by race found in this and other reports
are not discriminatory.

MOLLY, it’s a sad fact that there is still a lot of back-channel discrimination towards minorities in our economy, but it serves no logical purpose for a bank to engage in that. They just want your money, you being any person of any colour out there.

It could legitimately be that minority borrowers have that much worse credit in these areas (and I’m not saying that in a bud jr. way, if it’s true I know there are external factors that make it more difficult).

And for WF, they might just have cornerned the bad-credit black homebuyer market somehow.

Wells Fargo, however, was 10 times more likely. If you still think they’re innocent, then your knee-jerk ideology has made you completely blind.

Um, not really. Did the report also include how many times a non-white purchased higher-cost loans from, say, Countrywide?

Also, Wells Fargo may have the only banking branches in certain neighborhoods. Heck, I’ve got to drive 5 miles to my nearest TCF branch but there are two Wells Fargo branches within a mile of where I live. Therefore, it might be more likely that certain people (white, non-white, whatever) will use the bank closest to where they live rather than shop around for better rates … JUST BECAUSE THEY DON’T KNOW ANY BETTER.

Now, is that really racism?

HAHAHAH! It serves no logical purpose for a bank to engage in that! You are killing me. Are you SERIOUS? Have you ever heard of closing costs, Wayne? Have you ever heard of Wall Street?

These lenders sold loans all over the place and pocketed the high closing costs, sometimes as much as ten percent of the home’s value. Then, they sold the loans off to Wall Street, washing their hands of them.

“The lack of such public data makes it impossible to verify industry claims that the large disparities in levels subprime lending by race found in this and other reports are not discriminatory.”

Which is exactly all we (or at least I) have been trying to say. This report/story/whatever is based on a lot of assumptions which it doesn’t make very clear. They say it’s racist, the banks say it isn’t. Without the data, no one can be sure. Maybe the AGs can subpoena the information out of them if they have a reasonable suspicion. But can we stop jumping to conclusions because we want to hate large institutions? I want to hate them too, but doing so with a lack of clear data is something I can’t really do.

I see Molly’s point as being why is Wells’ so much higher than the industry average?

sleazy loan originators do not really have the bank’s best interests in mind either, molly.

there’s a lot of scumfucks in that industry that feed along the chain of money as it flows towards the actual home sale. that’s why the actual lenders are getting into trouble, because they looked the other way while this was happening and took their cut.

“I see Molly’s point as being why is Wells’ so much higher than the industry average?”

That is a legitimate question.

But Molly isn’t asking questions. She’s drawing conclusions. And she’s drawing conclusions about people who are asking questions.

Oh, please. You can call on your college rhetoric class all you want. It doesn’t prove that Wells was NOT ten times more likely to offer high-cost loans to black customers while the average lender was 3 times.

The AG in Illinois HAS subpoenaed them for the credit info. But like I said in the story, depending on their status (federally chartered bank vs. financial institution), they might not have to give up that info.

Secondly, minority neighborhoods do have fewer bank branches. They were red-lined areas for decades. It leaves lots of room for unregulated brokers who were quick to sell high-cost loans because they could.

we’re merely hypothetsizing about reasons which may explain these questions. maybe WF puts more bank branches in areas where minorities have worse credit (as suggested above).

We’re not exonerating WF by any means, only stating that one oughtn’t damn them without good evidence.

Given the fact that they are far above the industry average when it comes to selling high-cost loans to minorities, I’d say that’s pretty good evidence right there.

Really? This is the first ya’ll have heard about Wells Fargo predatory lending practices? It’s been going on for years, but the housing crisis just put them in a harsher light.

I remember Wells Fargo being one of the banks that Spitzer went after for questionable lending practices — I think. I’ll try to find the article I read about it — maybe.

Oh, I don’t doubt the predatory lending part, but I’m willing to believe they’re an equal opportunity fleecer… at least until a few questions are answered.

An equal opportunity fleecer? How so, Kurtis? What at all about the study or the lawsuits suggest they were equal?

I’m not really convinced by the way the numbers are presented that it’s racist. they just love ripping everyone off, and perhaps it’s easier for certain groups which they have a decent market share with. If someone already has bad credit it means they don’t make very good financial decisions, and if they happen to be a big part of your customer base, oh boy!

Oh, please. You can call on your college rhetoric class all you want. It doesn’t prove that Wells was NOT ten times more likely to offer high-cost loans to black customers while the average lender was 3 times.

So are you saying minorities are less likely to read and understand the consequences of signing a loan? Are they less competent at understanding how interest works? Are they less likely to read and do research on a given financial tool? They are individuals that have fee will no one made anyone sign a loan. This is insulting to minorities. I have a foreclosed house next to me in the burbs. The people that owned it where stupid white trash that bought new cars and toys when they should have paid their bills. Being a dumb shit crosses all racial and ethnic boundaries.

also is it really any surprise that minority borrowers are being disproportionately screwed by WF when they’re being disproportionately affected by the entire subprime mess? Everyone’s got some of that blood on their hands, certain banks just have more than others.

Secondly, minority neighborhoods do have fewer bank branches. They were red-lined areas for decades. It leaves lots of room for unregulated brokers who were quick to sell high-cost loans because they could.

Exactly. This is more a consequence of that than an active push to screw minority borrowers lately. We’ll always be paying for the sins of generations past.

Just to play the devil’s advocate, is there a chance that minorites are collectively less educated on the dangers/responsibilities of the loan business, and cannot adequately judge what is a fair vs. a predatory loan?

I’d like to see the numbers of actual loan applications in each racial segment, alongside the number of approvals.

sad but true….minorities are much more likely to have poor credit. the folks @ the Minnesota Monitor are mistaking the correlative for the causative, likely on purpose.

This is, pure and simple, an issue of economic & educational discrimination, not one of racial discrimination. banks only issue usurious loans to people likely to default becaus they either have poor credit history or who don’t understand finance. their race is merely coincidental.

I’m walking away now. If you want to scream racism, you’re doing it into a vacuum.

Just to play the devil’s advocate, is there a chance that minorites are collectively less educated on the dangers/responsibilities of the loan business, and cannot adequately judge what is a fair vs. a predatory loan?

Actually that jives completely with what I’m saying. There are certainly forces at work in our society that result in this, but I don’t think the bank is actively one of them. Passively, of course, but not actively.

I have a friend who worked in Wells’ mortgage dept. dealing specifically with Spanish speakers and she said her bosses were clearly trying to take advantage of them.

thank you, geoff. A+ post.

oh here comes the anonymous anecdote that proves everything is true.

case closed.

That’s funny, I have a friend who works in Wells’ mortage dept. dealing with Spanish speakers, and they told me that they give everyone a lolly and invite them over to dinner with the family. Some of them are still best friends!

Wells Fargo just doesn’t screw the minority neighborhoods, they will screw anyone they can however they can, wherever you live. From shitty homeloans that take advantage of people to all their fees for your accounts that keep going up all the time. You would think they were related to Gov. Pawlenty with all the increasing fees.

“What at all about the study or the lawsuits suggest they were equal? “

First of all, a lawsuit is not evidence of guilt. An accusation is not evidence of guilt. This is a very basic principle of the justice system.

Second of all, the study doesn’t mention credit ratings. I feel that’s important information. People with bad credit get lousy mortgages. It’s just a fact.

sad but true….minorities are much more likely to have poor credit. the folks @ the Minnesota Monitor are mistaking the correlative for the causative, likely on purpose.

But again, why is that not reflected across the rest of the industry? (10 times higher for Wells, vs. 3.8 for the rest of the industry). That big a difference just seems to be a big honking red flag that Wells is/was doing something vastly different than the rest of the mortgage industry.

From what I understand, WF targets poorer hoods – everything else comes along with it. When a family applies for a home loan and they are approved, they are “strongly” advised to refer family and friends – which they do as they now trust Mr. WF Home Loan Guy who has told them that he will “take care of them.” And the domino affect has begun.

Wayno – did I say I was proving anything? Who shit in your cornflakes?

Exactly mnblrmkr. The point isn’t credit ratings or education or institutionalized racism…The point is that WELLS FARGO was SEVEN TIMES MORE LIKELY than other equally large financial institutions to sell high-cost loans to African-American borrowers than white borrowers with equal income.

We can debate the reasons all we want. But being SEVEN TIMES MORE LIKELY than the rest of the industry to do so stinks of something else entirely. Case closed.

why is that not reflected across the rest of the industry? (10 times higher for Wells, vs. 3.8 for the rest of the industry).

Because, perhaps, there are more Wells Fargo branches available in poorer, less educated neighborhoods? Therefore, the more easily accessible credit (vis-a-vis getting your butt to a loan officer) would be found at Wells Fargo; hence the greater number of lower-income loan purchases made at Wells Fargo because the borrower is either not physically capable of shopping around or because they don’t know how to shop around for better rates.

I don’t think Bank of the Lakes has any branches south of Franklin or north of Washington Ave. In my own case, I have to drive 5 miles to visit my nearest TCF branch (or, heck, even a TCF/Cub ATM) while there are two Wells Fargo branches within a mile of my house. I don’t live in the inner-city but East Side St. Paul ain’t exactly Bloomington, either.

Wells Fargo, however, was 10 times more likely.

There is a business reason that would explain the disparity. Wells I believe is one of the top 3 if not the largest originator. They’re trying to be and or remain the biggest. They’re trying to capture market share.

They continue to thrive. I don’t believe they have been mentioned as an institution in trouble in light of recent market conditions. My best guess, and a very plausible one, is that they have stricter underwriting standards that determined a costlier mortgage for some of their minority clients.

It is a sad day indeed on MNSpeak when nearly as many people want to talk about someing important and relevent than about the bacon bra!

You people need to talk a long, hard look at yourself in the mirror…

(wearing a bacon bra, of course!)

Here’s the thing: Wells has both channels: subprime and prime. Also, if WF was about six times more likely than other large lenders (GMAC, Countrywide, HSBC, Citigroup, JP Morgan Chase, Washington Mutual) it has nothing to do with the number branches in these cities.

For one thing, Illinois only has 14 Wells Fargo bank branches…actual “banks” where someone can walk in and talk to a banker. In Maryland, they don’t even HAVE banks. Only mortgage “stores.” So these were brokers selling the loans outright in most cases.

(And to Bob: You just try getting a home loan wearing a bacon bra! It’s not easy, you know. It’s harder to be a bacon-bra wearer than it is a fan of blind porn.)

Ok, now back to original programming.

We can debate the reasons all we want. But being SEVEN TIMES MORE LIKELY than the rest of the industry to do so stinks of something else entirely.

what, like more heavily serving those markets?

Also, if WF was about six times more likely than other large lenders (GMAC, Countrywide, HSBC, Citigroup, JP Morgan Chase, Washington Mutual) it has nothing to do with the number branches in these cities.

10/3.8 != 6

Oh, ok. We’re going to argue the simple difference between one and two. Seriously? The only thing happening here anymore is the desire to be heard and to “win.” It’s everything wrong with the interwebs: chest-beating and gamemanship. I stand by my story. The end.

Heres the thing. Loan officers are sales professionals. And theyre acutely aware they are in competition with other sales professionals. When they get a minority prospect, they don’t get out ‘the high cost minority app’. They want to make a mortgage sale, and their ability to do that deopends on being able to offer a competitive product.

The app and its subsequent verification determines product for the buyer.

I am near certain they do in fact more heavily serve those markets, and they have better underwriting which has kept them out of trouble. They also securitize their mortgage portfolio a lot less than other companies. They have a model business model compared to a lot of other originators that are in trouble right now.

Call it what you will people. WF actively targets a specific group of people to specifically rip them off.
It’s all nice to be well educated and middle class so that you can call those who are poor, uneducated, and may not have the resources you take for granted, dumbshits.

108: I smell a whole lotta bullshit going on in what you’re saying.

Going after a certain group of people because it’s “competition” tells me they are sales “professionals” looking for skeesy way to make money.

You’re equating ‘target’ to ‘exploit’. Its just marketing for the sake of market penetration and share.

Cat: whats your reference point for your instincts. Do you have some industry experience?

I’ve worked for large, regulated corporations for years. I just don’t see the premeditation here.

Call it what you will people. WF actively targets a specific group of people to specifically rip them off.
It’s all nice to be well educated and middle class so that you can call those who are poor, uneducated, and may not have the resources you take for granted, dumbshits

Come on, people chose to sign the bottom line. They are responsible for their actions. Being poor does not mean being stupid. People act as though minorities should be treated like children and protected from the big bad white society. Please, they are as capable or incapable as any other group.

Oh, ok. We’re going to argue the simple difference between one and two. Seriously? The only thing happening here anymore is the desire to be heard and to “win.” It’s everything wrong with the interwebs: chest-beating and gamemanship. I stand by my story. The end.

No, but severely distorting the numbers is something that annoys me and is counterproductive to any discussion. I don’t have any idea what you mean by ‘win,’ except maybe a desire to talk people out of jumping to conclusions about situations where there’s inadequate information to be so thoroghly convinced of something.

but if you’re going to imply I’m acting like some kind of trolling internet turd out to shout someone down, that’s fine. I could just call you stupid and easily manipulated by tugging at your heart-strings and white guilt. But that’s not how I roll.

Wayno: “But that’s not how I roll.”

But Wayno, you just did.

There’s only one way to roll, and that’s rickly.

(btw, this is the best damned rick roll ever.)

Kurtis, you can’t announce your rickroll…

well if someone’s going to call me a chest-thumping interweb troll what am I supposed to do? let it slide?

nuh-uh! that’s my NAME we’re talking about. you don’t diss my name on the streets.

“Kurtis, you can’t announce your rickroll…”

Hey, the WF story was on the noon news on CNN. I put it up on youtube.

Much better.

nuh-uh! that’s my NAME we’re talking about. you don’t diss my name on the streets.

Marlo, is that you?

why, yes, yes it is.

“Severely” distorting the numbers. That’s a good one.

Just to play the devil’s advocate, is there a chance that minorites are collectively less educated on the dangers/responsibilities of the loan business, and cannot adequately judge what is a fair vs. a predatory loan?

The fact that 90% of them vote democrat tells me that they are clueless when it comes to economics.

The fact that uyou are once again trying to turn this into a partisan pissing contest tells me that you are clueless about how to behave in a public forum. Stop it.

heh

molly, 10/3.8 = 2.6

so there’s a big difference between 2.6x as much as 6 or even 7x as much, like you were saying.

Ok, you’re right based on how I presented the numbers in the above sentences. I left out the “average” piece. I wasn’t severely distorting the numbers on purpose. Let me correct myself:

So Wells Fargo is still 10x more likely than the average to offer high-cost loans to minorities, and it is 2.6 or so more likely than the other banks combined to offer high-cost loans.

However, Wells Fargo is still SIX TIMES THE AVERAGE more than likely to offer high-cost loans than the other banks combined.

what do you mean “the average?”

of their customers with ‘bad’ loans, approx 10x as many are minority. other banks average around 2-4x.

I still have no idea where you’re getting this ‘average’ from. Having a 1:1 ratio of bad loans to minorities vs. bad loans to whitey is not an ‘average.’ It would be ideal and equitable, given there were no other external factors influencing things.

But there are, like all the entrenched disparities in our system that tend to make minority populations less affluent. Having more bad loans to minorities than to white people is a consequence of these other factors, not a cause.

But I really don’t know where you’re getting this ‘average’ from, because the point here is that the average ratio (which is what these 10, 2.6, 3.8 etc. are) of back loans to minorities vs. white people is above one, which means there are essentially ALWAYS more minorities with bad loans. Some banks just have more than others. Whether this is through conscious targeting of them (as you seem to assert) or through a consequence of their marketshare remains to be seen. That’s what I’m taking issue with here.

Ok, Wayne. You do your own reporting and research and get back to me on that.

I don’t care that much. But I’d like to see some of that data (part of which hasnt’ been and may not be released anyway, which is a bit fishy, but …) before I jump to a conclusion that there’s institutionalised racism in the lending world.

Well, let me just say that Wells Fargo was actually ninth in subprime loan originations in 2003, behind Citi, Countrywide, and Washington Mutual. Let me also just reiterate (as I wrote in the story) that it wasn’t the bank “branches” that were doing this, but the “mortgage stores,” which weren’t federally regulated. So the branch argument falls flat there. As does anything regarding their market share.

Ok, I am going on a bike ride now. Peace out, Wayno.

damn you
I am stuck inside for another hour and a half.

I want to be on my bike. NOW!

Agggh! Too late! It’s raining (wayne-ing!) Time to take a nap instead.

WTF? NO NO NO!
UNACCEPTABLE I WAS LOOKING FORWARD TO RIDING ALL DAY

wait wait, I checked the weather and not only is it in the sixties (HOLY FUCKBALLS) but it looks like the rain may not last very long or might skip around my part of town.

THAT IS A-OK!

As a former Wells Fargo customer in California from before they moved to the Twin Cities, my experience with how they handled my paycheck and my student loans was that they were dishonest, so I stopped banking with them as soon as I could. Just an anecdote. No proof of grand conspiracies!
But my opinion? They suck.