SAN FRANCISCO—
Gia Gray seems like a dream client for any bank: a well-off family doctor living in an exclusive Bay Area town, in a 5,000-square-foot mansion with a master bath bigger than my office.
With a credit score topping 800, she expected little drama when she and her husband decided to refinance their Danville home and two other investment properties in 2020 to capture some of the lowest interest rates in recent history — remember when 3% loans were a thing?
But after endless excuses and delays in her applications, “I started feeling Black,” Gray told me. Her bank, Wells Fargo, flat out turned her down on the investment properties, she said, and slow-rolled the application on her residence, coming up with new requirements as the process dragged on.
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“At the visceral level, I felt that something was not right,” she said.
Across the country, other borrowers have had similar experiences. Earlier this year, a federal court in Northern California, where Wells Fargo is headquartered, consolidated the claims of Gray and seven other Black plaintiffs into one case that may be certified as a class-action suit in coming months.
The lead attorney in the case, Los Angeles-based Dennis S. Ellis, says up to 750,000 minority customers nationwide — Black, Asian and Latino — could have been affected by what he sees as a pattern of discriminatory lending that left qualified borrowers denied or pushed into higher interest rates and more expensive loans.
It’s a form of modern-day economic redlining, he told me, that if proven true inflicted pain that resonated beyond the borrowers, many of whom lost out on a chance to save hundreds or thousands off their loans each month. It also hurt Black and minority communities as a whole, because it took away an exceptional chance to build generational wealth through affordable homeownership.
“Realizing the American dream of owning your own home is not just about having a safe place to live,” Ellis pointed out. “It’s about securing the future of generations that follow because of the incredible financial stability that homeownership provides.”
Ellis contends that the problem developed in part because Wells Fargo was short-staffed during the pandemic and relied on flawed algorithms and an automated system that may have had discrimination baked into it.
But it wouldn’t be the first time Wells Fargo was found to have discriminated. In 2012, the U.S. Department of Justice won a $175-million settlement against the bank, the second-largest fair-lending settlement in the department’s history, over allegations that Wells Fargo engaged in a pattern or practice of “discrimination against qualified African-American and Hispanic borrowers in its mortgage lending from 2004 through 2009.”
The cities of Oakland and Philadelphia have also sued Wells Fargo for discriminatory lending practices; Philly settled its case for $10 million in 2019.
Wells Fargo has been accused of holding fake job interviews with minority candidates for posts that had already been promised to other applicants, low-balling home appraisals and ignoring issues of discrimination that, as they come to light, may be harming the bank’s bottom line.
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Wells Fargo has denied all of the allegations, including those made in this lawsuit. In a statement, the company said it was confident it was following all required guidelines and that its underwriting practices are consistently applied regardless of a customer’s race or ethnicity.
“These allegations against Wells Fargo stand in stark contrast to the company’s significant and long-term commitment to closing the minority home ownership gap,” the statement read.
It’s not just owning a home, though. It’s owning it on good terms.
Google tells me that a $500,000 30-year loan at 3% interest costs about $900 less a month than a loan at 6% interest — about $324,000 over its lifetime. For the folks who weren’t able to refinance, that’s money lining corporate pockets instead of paying for college or retirement or funding other investments.
The lawsuit alleges that in 2020, “at a time when millions of white Americans were able to take advantage of historically low-interest rates for home loans,” Wells Fargo approved 47% of refinancing applications from Black homeowners, 53% from Hispanic and/or Latino homeowners, and 67% from Asian American applicants. That compares with 71%, 79% and 85%, respectively, for these same groups across all other lenders, according to the lawsuit.
That same year, Wells Fargo approved 71% of residential refinancing applications from white borrowers.
Ouch, Wells Fargo. Those are some dismal numbers.
The lawsuit also alleges that federal data show Wells Fargo was more likely to approve refinancing applications from low-earning white borrowers than high-earning Black borrowers. Analyzing data from 8 million refinancing applications filed in 2020, Ellis and his team found white applicants earning less than $63,000 a year were “more likely to have their refinancing application approved by Wells Fargo than Black refinancing applicants earning between $120,000 and $168,000 a year,” according to the lawsuit.
The insidiousness of financial discrimination lies in how hard it is to prove on an individual basis — and in how hard it is to even believe it’s happening. The loan process can be so remote and impersonal — even more so during the isolation of the pandemic — that Gray and her co-plaintiffs were at first unsure if what they felt was really taking place.
Last week, Gray met two of those other borrowers in person at a news conference in San Francisco. I spoke with the three of them in a coffee shop afterward, but mostly I just listened, because there was a tremendous sense of relief and camaraderie as they shared how similar their experiences had been.
Until the lawsuit, Aaron Braxton, a Los Angeles homeowner, had been left wondering, “Are they doing this to everybody, or are they only doing this to Black folks?” he said.
Braxton was one of the first to file a complaint in 2020. A noted screenwriter, playwright and teacher, Braxton had owned his home in a historically Black neighborhood near USC for about 18 years and owed a fraction of what it was worth when he went to refinance his Wells Fargo mortgage. Like Gray, it was one thing after another, despite never missing a payment and having good credit. By the time Wells Fargo approved his loan, the interest rate had climbed and so had his frustration.
“I told them, ‘I am going to sue you. I don’t know how I’m going to sue you, but I am going to sue you, because I know I am not the only one,’” he said.
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Gray was scrolling through her phone during the pandemic lockdown and came across a story about Braxton. “It was like a bright bulb,” she recalled, “and I said, ‘Oh, my God, this happened to someone else.’”
Christopher Williams flew in from Georgia, where he owns a home and rental properties. He worked in the financial industry for decades, so when Wells Fargo offered him a loan at 3 points higher than he expected, he asked why. Williams said the bank couldn’t give him clear answers, and he too began to suspect it was about the color of his skin.
Now, Williams said he wonders how many people there are who accepted loans at higher rates or with higher costs without knowing it. “How many of those loans and lines of credit are on the books of Wells Fargo right now?” he asked.
Ellis will be in federal court in San Francisco for the lawsuit on Thursday, the anniversary of the death of George Floyd. He says like the movement Floyd’s death set off to address issues of social justice, he hopes this case can raise awareness of financial injustice and its toll — which he considers the “21st century battleground of civil rights.”
“Just as we’ve cried out against policing practices that kill Black lives, so we denounce Wells Fargo’s racially motivated banking practices that kill Black opportunity,” said civil rights attorney Ben Crump, who is also involved in the case.
Interest rates are not as compelling as the tragedy we witnessed with Floyd, but Crump and Ellis make an important point.
This is a capitalist joint.
Until we all have the same opportunities to create wealth, we’re left with the oppressed and the oppressors, who too often get away with strangling equity under the cover of paperwork and algorithms.
FAQs
Column: Wells Fargo denied well-off borrowers low-interest loans. Is it because they're Black? ›
Is it because they're Black? A group of Black plaintiffs is suing Wells Fargo, alleging a pattern of discriminatory lending that left qualified borrowers denied or pushed into more expensive loans.
How do I know if I qualify for Wells Fargo settlement? ›Wells Fargo customers from 2011 to 2022 are potentially covered by the settlement. Wells Fargo is required to notify its customers if they are included but if you believe you are eligible for a payment and have not received a letter yet, you should first contact Wells Fargo at 844-484-5089.
What is the Wells Fargo predatory lending settlement? ›Wells Fargo agreed to a $3.7 billion settlement with the Consumer Financial Protection Bureau over customer abuses tied to checking accounts, mortgages and auto loans, with some of the misconduct happening as recently as this year.
Is Wells Fargo getting out of the mortgage business? ›The bank is shrinking its mortgage servicing portfolio, and completely walking away from "correspondent lending," where it buys loans from smaller lenders.
Why did Wells Fargo give me a fee refund? ›Wells Fargo Deposit Accounts
Customers whose accounts were improperly closed or frozen, falsely charged overdraft fees or mistakenly billed account service fees may be eligible for refunds.
For mortgage holders that were unable to modify their mortgages to avoid foreclosure, damages average $24,125 per claimant. For deposit accounts, customers average $100 in damages.
What is Wells Fargo in trouble for? ›Warren's report focused on Wells Fargo as a bank where fraud involving Zelle was particularly prevalent, as the number of fraudulent transfers rose 2.5 times between 2019 and 2022. The senator further said that the bank "attempted to mislead" by capping the data it provided in 2021.
Who gets Wells Fargo settlement? ›Bank account holders
Likewise, those customers who were unfairly charged monthly fees despite the bank's advertised no fees for 10 or more purchases with their debit card. Wells Fargo must pay damages to some customers whose money was unfairly “frozen” for weeks when the bank suspected a single deposit was fraudulent.
- Equity Stripping. The lender makes a loan based upon the equity in your home, whether or not you can make the payments. ...
- Bait-and-switch schemes. ...
- Loan Flipping. ...
- Packing. ...
- Hidden Balloon Payments.
What is Predatory Lending? Predatory lending practices, broadly defined, are the fraudulent, deceptive, and unfair tactics some people use to dupe us into mortgage loans that we can't afford. Burdened with high mortgage debts, the victims of predatory lending can't spare the money to keep their houses in good repair.
Has Wells Fargo declared bankruptcies? ›
Wells Fargo said it has notified other potential United creditors of both filings. United officials had not submitted a formal reply as of Monday. The manufacturer has not filed for federal bankruptcy protection since unexpectedly shutting down the business in the early morning of Nov.
Why are they closing my Wells Fargo account? ›A bank generally can close your account at any time and for any reason—and sometimes without notifying you in advance. Reasons a bank may shut down your account include using your account very little or not at all, or bouncing too many checks.
Why is Wells Fargo laying off mortgage processors? ›The company cut bankers who operated in areas outside of its branch footprint and who therefore didn't fit in the new strategy of catering to existing customers, according to people with knowledge of the situation.
How many times does Wells Fargo run a check? ›Generally, a bank may attempt to deposit the check two or three times when there are insufficient funds in your account.
How much did Wells Fargo dispute cost? ›Wells Fargo, as a merchant payment processor, imposes a fee of $25 for each chargeback that occurs. In addition, they have the discretion to recoup any fees that are imposed by other institutions engaged in the dispute. On the other hand, if Wells Fargo serves as the issuing bank, merchants are not subject to any fees.
How much is Wells Fargo overcharge fee? ›What is the fee for overdrafts? Our overdraft fee for items paid into overdraft is $35 per item. Footnote 6 6 We charge no more than three overdraft fees per business day for personal accounts. We do not charge a returned item / non-sufficient funds (NSF) fee for items returned unpaid.
What is the most recent Wells Fargo scandal? ›Wells Fargo paid $3 billion in February 2020 to settle federal civil and criminal probes, admitting at the time that it pressured employees between 2002 and 2016 to meet unrealistic sales goals, which led them to open fake accounts for customers.
What is the Wells Fargo lawsuit for 2023? ›A Wells Fargo bank branch in New York, US, on Wednesday, March 29, 2023. Wells Fargo & Co has agreed to pay $1 billion to settle a lawsuit accusing it of defrauding shareholders about its progress in recovering from a series of scandals over its treatment of customers.
What did Wells Fargo have to pay $250 million for? ›WASHINGTON—The Office of the Comptroller of the Currency (OCC) today assessed a $250 million civil money penalty against Wells Fargo Bank, N.A, of Sioux Falls, S.D., based on the bank's unsafe or unsound practices related to deficiencies in its home lending loss mitigation program and violations of the 2018 Compliance ...
Did anyone from Wells Fargo go to jail? ›But last week, the U.S. Attorney's Office in Los Angeles made an unexpected announcement. Carrie Tolstedt, Wells Fargo's longtime former head of retail banking, agreed to plead guilty to a single felony charge of obstructing a bank examination. The deal calls for a 16-month prison term.
Why are people protesting Wells Fargo? ›
Protesters in San Francisco chained themselves together outside a Wells Fargo bank as part of a national effort to get banks to move away from investing in fossil fuel projects. San Francisco climate activists chained themselves together outside a Wells Fargo branch in the rain.
What is the most stable bank in America? ›| Bank | Assets |
|---|---|
| JP Morgan Chase | $3.2 trillion |
| Bank of America | $2.42 trillion |
| Citi | $1.77 trillion |
| Wells Fargo | $1.72 trillion |
Wells Fargo is known to take legal action against individuals for defaulted credit card debt and loans. Filing collection lawsuits against consumers is common for large creditors to try to recover unpaid debts. The company hires experienced debt collection law firms to handle its collection litigation.
How long does it take Wells Fargo to settle a claim? ›Important information. Within 10 business days, your claim will be resolved or your account will receive a temporary credit if additional investigation is needed. We will also reverse related fees and adjust interest as applicable, if temporary credit is issued or upon the resolution of your claim.
What is an illegal loan? ›An unlawful loan is a loan that fails to comply with—or contravenes—any provision of prevailing lending laws. Examples of unlawful loans include loans or credit accounts with excessively high-interest rates or ones that exceed the legal size limits that a lender is permitted to extend.
What type of individuals most frequently fall victim to predatory lenders? ›Households that have limited incomes but significant equity — such as homes owned by the elderly — are especially at risk.
What is a loan flipping? ›How loan flipping works. The typical situation involves a lender that coaxes and convinces a homeowner to repeatedly refinance their mortgage while also persuading them to borrow more money each time.
Which of the following is most susceptible to a predatory lender? ›Predatory lenders tend to target vulnerable demographics, typically those with poor credit, low income and a lack of education. Those who may be vulnerable to discriminatory lending practices based on factors such as age, disability or race may also be susceptible to predatory loans.
What is another name for predatory lending? ›Other types of lending sometimes also referred to as predatory include payday loans, certain types of credit cards, mainly subprime, or other forms of (again, often subprime) consumer debt, and overdraft loans, when the interest rates are considered unreasonably high.
What is the limit for predatory lending? ›Starting next year, Californians who take out consumer loans of between $2,500 and $10,000 can be charged an interest rate no higher than 35%.
Who bought out Wells Fargo loans? ›
Wells Fargo sold its student loans to Firstmark, whose parent company, Nelnet, is well-established in the student loan industry. If you have a student loan with Wells Fargo, the transfer will be made with no action necessary on your part.
Is it safe to have money in Wells Fargo? ›Fortunately for consumers, there are thousands of financial institutions that are FDIC-insured, including Wells Fargo. FDIC insurance limits cap at $250,000. The FDIC insures certificates of deposit and money market accounts, along with traditional checking and savings accounts.
Did Wells Fargo break the law? ›Topline. The Federal Reserve and Treasury Department fined Wells Fargo $97.8 million on Thursday for allowing a foreign bank to make hundreds of millions of dollars in transactions that were prohibited under U.S. sanctions laws, the latest multi-million-dollar penalty from regulators to hit Wells Fargo in recent years.
Can you reopen a closed bank account Wells Fargo? ›How do I reactivate my dormant account? Please call us at 1-800-869-3557, 24 hours a day, 7 days a week, or visit a Wells Fargo branch. Please call us at 1-800-237-8472, Monday – Friday 8 am to 8 pm Eastern Time (excluding federal holidays), or visit a Wells Fargo branch. Reactivation may take up to 3 business days.
What to do if a bank won't give you your money? ›File a complaint about a financial institution
Contact the branch manager, the customer service hotline, or the institution's website. Use this sample complaint letter as a guide to help you explain the problem and how you want the bank to fix it. Provide copies of receipts, checks, or other proof of the transaction.
Yes. Generally, banks may close accounts, for any reason and without notice. Some reasons could include inactivity or low usage. Review your deposit account agreement for policies specific to your bank and your account.
Is Wells Fargo firing people? ›Wells Fargo laid off more than 500 mortgage bankers in a round of job cuts announced Tuesday, CNBC and Bloomberg reported, citing people with knowledge of the situation. “We announced in January strategic plans to create a more focused home-lending business,” a bank spokesperson told both outlets.
Is Wells Fargo Advisors in trouble? ›SEC Charges Wells Fargo Advisors With Anti-Money Laundering Related Violations. The Securities and Exchange Commission today announced charges against Wells Fargo Advisors for failing to file at least 34 Suspicious Activity Reports (SARs) in a timely manner between April 2017 and October 2021.
Will there be layoffs in 2023? ›The running total of layoffs for 2023 based on full months to date is 168,243, according to Layoffs.fyi. Tech layoffs conducted to date this year currently exceed the total number of tech layoffs in 2022, according to the data in the tracker.
What happens when you deposit over $10000 check? ›Banks Must Report Large Deposits
“According to the Bank Secrecy Act, banks are required to file Currency Transaction Reports (CTR) for any cash deposits over $10,000,” said Lyle Solomon, principal attorney at Oak View Law Group.
How much money can I deposit in the bank without being reported? ›
Depositing a big amount of cash that is $10,000 or more means your bank or credit union will report it to the federal government. The $10,000 threshold was created as part of the Bank Secrecy Act, passed by Congress in 1970, and adjusted with the Patriot Act in 2002.
How long does it take for a $10000 check to clear at Wells Fargo? ›Wells Fargo Bank's general policy is to make deposited funds available on the first business day after the Bank receives a deposit. In some cases, however, we may place a deposit hold on these funds and delay availability for up to 7 business days.
What is the Wells Fargo controversy? ›The Wells Fargo fake accounts scandal was a major financial scandal that shook the banking industry to its core. The revelation that the bank had been creating fake accounts in the names of its customers without their knowledge or consent was a major blow to its reputation and financial stability.
Who is responsible for the Wells Fargo scandal? ›In November 2020, the SEC filed civil charges against two former senior executives, Stumpf and Tolstead, accusing them of misrepresentation to investors of key performance metrics.
Is Wells Fargo still sending out settlement checks? ›Welcome to the Wells Fargo ERISA Fee Settlement Home Page.
The Court granted Final Approval to the Settlement on August 31, 202, and the Settlement is now final. Settlement distributions are expected to occur in early 2023. This website is provided as a service to eligible settlement participants.
You can be charged for up to three overdraft fees per day, for a total of $105. Customers enrolled in overdraft protection are not charged overdraft fees. Wells Fargo has eliminated NSF fees (non-sufficient funds) as of March 2022.
What happens if your bank account goes negative and you never pay it? ›Negative accounts count as unpaid debts, so a bank can take legal action against you. The bank could use legal remedies against you to get enough money to cover the unpaid bank balance. Banks and credit card companies can garnish wages in court.
Who gets the Wells Fargo settlement? ›“If approved, this settlement will help compensate hundreds of thousands of investors – state employees, nurses, teachers, police, firefighters and others – whose critical retirement savings were impacted by Wells Fargo's fraudulent business practices,” Steven Toll, managing partner at Cohen Milstein Sellers & Toll, ...
How do I claim a Wells Fargo deal? ›Call Wells Fargo Rewards Customer Service at 1-877-517-1358 to redeem your rewards, seven days a week, 8:00 am to midnight, Eastern Time, excluding major holidays.
Who benefits from Wells Fargo settlement? ›"If approved, this settlement will help compensate hundreds of thousands of investors — state employees, nurses, teachers, police, firefighters and others — whose critical retirement savings were impacted by Wells Fargo's fraudulent business practices," said Steven J. Toll, managing partner at Cohen Milstein Sellers & ...
How do I know if I qualify for the Capital One settlement? ›
How do I know if I am part of the Settlement? You are a Settlement Class Member if you are among the approximately 98 million U.S. residents identified by Capital One whose information was accessed in the Capital One Data Breach.
What is the status of Wells Fargo lawsuit? ›Home - Wells Fargo ERISA Settlement. The Court granted Final Approval of the Settlement on August 31, 2022, and the Settlement is now final. Settlement distributions have been released to eligible class members.
How does Wells Fargo cash back deals work? ›Unless otherwise disclosed in the Deal Terms, cash back earned from the Deals will be credited to the Eligible Card You, or another Shared Account Customer, used to redeem the Deal within 30 days of the offer being redeemed. For credit cards, the cash back will appear in the form of a statement credit from Wells Fargo.
Does Wells Fargo sue for debt? ›Does Wells Fargo Sue for Debt? Wells Fargo is known to take legal action against individuals for defaulted credit card debt and loans. Filing collection lawsuits against consumers is common for large creditors to try to recover unpaid debts.
What is a Wells Fargo redemption? ›Redeem for Cash Back
Rather than just using your points as a statement credit, which is one option, you can also get cash back through an ATM. ATM redemptions are available in $20 increments when you use a Wells Fargo ATM. There's a minimum redemption of 2,000 points.
The financial institution has agreed to pay than $2 billion directly to over 16 million customers affected between 2011 and 2022 as part of the $3.7 billion settlement. The remainder of the settlement will go to the victims' relief fund.
What are 2 benefits do Wells Fargo offer? ›We offer comprehensive and competitive medical, dental, and vision benefits.
How much is the Wells Fargo ESOP settlement? ›Under the terms of the settlement, Wells Fargo and Company, Wells Fargo Bank and plan trustee GreatBanc Trust Company agreed to pay $145 million, of which $131.8 million was allocated for eligible current and former 401(k) plan participants.
What is the Capital One breach payment? ›The settlement allows reimbursement for up to $25,000 in out-of-pocket expenses related to the data breach. This includes money spent preventing identity theft or fraud, unreimbursed fraud charges, miscellaneous expenses, professional fees, and up to 15 hours of lost time at a rate of at least $25 per hour.
How much money is in a Capital One settlement? ›In addition to other benefits, the proposed Settlement requires Capital One to establish a Settlement Fund of $190 million.
Does everyone get approved for Capital One? ›
Although Capital One offers cards for every credit level, a very good or even excellent credit score (740 and above) increases your chances of approval for the best Capital One credit cards. And, although your credit score is one of the most important factors Capital One looks at, it's not the only factor.