Late last night Wells Fargo announced its plans to cut 3,800 jobs, close 638 of its Wells Fargo financial stores nationwide and officially stop handing out subprime loan packages. The move is a long time coming for a bank that’s been at the forefront of the subprime mortgage crisis for communities of color.
The bank’s shady lending practices in communities of color were well documented at the beginning of last year, when a former employee, Beth Jacobson, detailed how she’d spent the better part of a decade riding “the stagecoach from hell” and doling out costly subprime loans to working- and middle-class aspiring homeowners, even when they could afford prime loans. Loan officers even strategically went after Black churches.
“We just went right after them,” Jacobson told the New York Times in 2009. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”
And that’s not even the worst of it. In a federal affidavit filed the same year, another loan officer testified that bank representatives called Black customers “mud people” and termed subprime lending “ghetto loans.”
Once the housing bubble went bust, Wells Fargo became the ire of foreclosed homeowners and city governments, who were often left to foot the bill for hundreds of thousands of dollars in taxes and city services. Baltimore and Memphis filed suit, along with the NAACP, charging that the company had violated the federal Fair Housing Act. In Baltimore, for instance, 71 percent of foreclosed properties owned by Wells Fargo were in predominately Black neighborhoods.
And as ColorLines’ Seth Wessler reports today, communities of color are still being hit hard by foreclosures nationwide.
Photo: Getty Images/Justin Sullivan