The Wells Fargo Watch
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ICP has published a book about the Wells-relevant topics of predatory lending, and corporate fraud - click here for sample chapters, here for a map, here for fast ordering and delivery, and here for other ordering information. CBS MarketWatch of April 23, 2004, says it has "some very funny moments." The Washington Post of March 15, 2004, calls Predatory Bender: America in the Aughts "the first novel about predatory lending;" the London Times of April 15, 2004, "A Novel Approach," said it "has a cast of colorful characters." See also, "City Lit: Roman a Klepto [Review of ‘Predatory Bender’]," by Matt Pacenza, City Limits, Sept.-Oct. 2004. The Pittsburgh City Paper says the 100-page afterword makes the "indispensable point that predatory lending is now being aggressively exported to the rest of the globe." Click here for that review; click here to Search This Site For or with more information, contact us.
Updated January 4, 2010
Inner City Press / Community on the Move (ICP) and its Fair Finance Watch have become increasingly concerned with Wells Fargo's predatory lending, including overseas. ICP first identified these issues at Wells in 1997 (see discussion of Wells' "Island Finance" and its 25% interest rate loans, below), and raised them then, and in 2000 (see, e.g., "N.Y. Activists Seek Nevada Hearing," Las Vegas Sun, Oct. 24, 2000, and "Consumer Advocates Want Hearings on Wells Fargo Deal," Associated Press, April 18-19, 2000 (Alaska). See also, "Group Objects to Wells Deals," by Todd Davenport, American Banker, July 29, 2003, Pg. 17, quoting ICP that "Wells Fargo is a predatory lender, and is exporting these practices beyond the United States." See also, "Group Files to Block Wells Fargo Acquisition," Seattle Post Intelligencer, July 29, 2002; "Wells Fargo Accused of Predatory Lending," Denver Post, July 29, 2003; "Wells Fargo Accused of Unfair Lending," Rocky Mountain News, July 29, 2003; longer list here.
Update of January 4, 2010: Wells Fargo, already being sued by Baltimore for targeting people of color with high cost loans, has now been hit with a similar law suit in Memphis, Tennessee. "Ghetto loans," they call them.
Update of December 7, 2009: In repurchases from Fannie Mae and Freddie Mac, Bank of America disclosed in the third quarter that it bought back, through Sept. 30, $922 million of mortgages tied to faulty underwriting. It of course doesn't break down the size of its repurchase reserve.
Update of September 14, 2009: We note the Malibu partying of Cheronda Guyton, Wells Fargo bank's senior VP for foreclosed properties....
Update of July 27, 2009: "Robert Joss is leaving the board of directors at Wells Fargo to join the board of Citigroup" - WTF? Who is it, that offered him the Citigroup position? How isn't it a conflict of interest, given Citigroup's and Wells' fight for Wachovia? What about the other conflicts of interest on the Citigroup board?
Update of July 13, 2009: Wells Fargo is refusing to help Californians in their time of need, announcing it will not accept the State's IOUs. As noted by the Associated Press, "clearly, the federal government has leverage over these institutions," said [Inner City Press / Fair Finance Watch]. Hundreds of banks have received aid from the government as part of its $700 billion rescue plan last fall."Update of May 11, 2009: So the Fed even cooked the books on the stress tests, after Wells Fargo threatened to sue. Way to regulate...
Update of April 27, 2009: From the mailbag -
Subj:
My Plight with Wells Fargo Auto Financial
From: [Name withheld in
this format]
To: Inner City Press
Sent: 4/17/2009 6:59:57 P.M.
Eastern Daylight Time
Hello Matthew,
I've been referred to you by a family member to contact you about some trouble I've been having with Wells Fargo Auto Financial. I'd like to share my story with you, in hopes that you will promote awareness regarding Predatory and Discriminatory Lending Practices.
I myself, am a young, black female; have always been a part-time worker, and full-time student (until recently as of 4/06/09); and a single mother. At the time I contracted with WF, these same characteristics applied.
December 2007, I was deceived into a contract for an auto loan that did not state the terms that was initially discussed. Based on my good credit history, I was told that Wells Fargo would pay off all of my credit card debt, and buy out my car loan from Bank of America and I would end up paying a low monthly payment each month. Right before it is time to sign the contract, Wells fargo change the terms, and decided it was best to give me a check in the amount of $2000 to pay off my own debt, and buy out my car loan ($18K). This was a little fishy to my then, but I felt pressured to go ahead with the deal because (1) I spent almost 3 hours in this office, and I had to leave quickly; (2) I needed the money to pay off some debt and bills; (3) Wells Fargo offered an additional line of credit (as an incentive) for $1000, and (4) I didn't have to start paying for another month and a half.
The terms were $505.77 per month, which was far less than what I was paying for the bills separately. He told me where to sign, and I left. Things were fine for the first couple of months.
May 2008, I had a life changing event occur. My daughter had chronic bronchitis due to Chicago's weather and I had to move to Arkansas for a better climate environment. Upon my move I had certain job leads that fell through and was out of work for at least 4 months. During the entire time, Well Fargo called everyday, at least 3 or 4 times a day. My credit score dropped tremendously, and no one was willing to help. Once I did find a job, I paid all I could to Wells Fargo to get things back on track, but all the money was going torward the interest and not the principle of the load, which kept me at a standstill with paying it down.
I now landed a job where I currently make $30K. As I discussed to Wells Fargo, I've worked in the $505.77 in my monthly budget; but I know that I don't have the money to pay a past due balance, late charges, the current monthly payment, and rolocation expenses in preparation for this new job. I've kept them up to date with all of the changes, and yet they continue to threaten me with repossession, despite the fact that I paid out over $1500 within the last month and a half.
I've called numerous times to see if my loan can be restructured, and been given countless run arounds. Finally, Wells Fargo Bank explained that neither them nor Wells Fargo Auto Financial work with customers (new or existing) that live in Arkansas.
Bottom line, there was absolutely nothing they could do to help me. All the while, I owe $505.77 for March payment, $272.99 in late charges, $505.77 for April, and the $505.77 in May. My credit score is shot, so no other bank will loan me anything, and no car dealership is willing to take a trade in for a car only worth $8000 but a loan attached to it for $20,000.
I've contacted the CEO, John G. Stumpf, who had someone else send me a letter back explaining that since I signed the contracted there was nothing they could do. I'm seeking justice in that, Well Fargo needs to be stopped. They thought it was best for my financial situation to require a full-time student, part-time worker, single parent, young black lady to pay them $33,380.82 on a car worth $8000. Tack on a 19.24% interest rate to a loan, which would have me pay them $13,035.13 outright.
This is ridiculous, and something must be done. I trusted Wells Fargo in that they were charged to help me. They initially told me that there was something they can do to help, and made me believe that this is what was best for my situation. Now that I am a customer of theirs, there is nothing they can do to assist me. I am enraged!
Us too.
Update of April 6, 2009 -- In the first
study of the just-released 2008 mortgage lending data, Inner City Press
/ Fair
Finance Watch has found that Wells Fargo Bank confined African
Americans to
higher-cost loans above this rate spread 2.18 times more frequently
than
whites. Wachovia Mortgage FSB, the largest lender of Wachovia which
Wells Fargo
acquired, had a lower disparity, at 1.46.
Update
of January 19, 2009: Here are
properties in The Bronx, New York on
which Wells Fargo has foreclosed:
2096
RYER
AVE BRONX 2862 Multi-family $374,900 N
5730
POST
ROAD BRONX 1809 Multi-family $599,000 N
605
WALES
AVE BRONX 2700 Duplex TBD N
2194
WASHINGTON AVE BRONX 2403 Multi-family $325,000 N
4027
EDSON
AVE UNIT 1 & 2 BRONX 1848 Duplex $339,900 N
2782
CRESTON AVE BRONX 2000 Multi-family TBD N
Update
of January 5, 2009: Talk by Wells Fargo that
they had cleaned up their predatory lending act has been blown out of
the water
by the example cited by even the Wall Street Journal, of a $103,000
mortgage on
a shack in Arizona, purchased by Wells --
"Less
than two years ago,
Integrity Funding LLC, a local lender, gave a $103,000 mortgage to the
owner,
Marvene Halterman, an unemployed woman with a long list of creditors
and, by
her own account, a long history of drug and alcohol abuse. By the time
the
house went into foreclosure in August, Integrity had sold that loan to
Wells Fargo
& Co."
We'll
wait
to hear the spinmeisters at Wells try to explain this one away...
Update
of December 15, 2008: After
most big banks and
even many non-banks have already drawn down their bailout funds from
the government's
Troubled Assets Relief Program, there's belated interest in Congress in
what banks
have been doing. On the afternoon of December 8 on the Senate floor,
Byron Dorgon of
North
Dakota expressed shock at Wachovia's
purchase and lease-back of German sewer
system, just so it could use the depreciation of the German pipes to
avoid its
U.S. taxes.
Update
of December 1, 2008: From the mail
bag --
Subj: Reporting a Wells
Fargo
Issue
From: [Name withheld in
this
format]
To: Inner City Press
Date: 11/15/2008 12:39:20
P.M.
Eastern Standard Time
Hi, after reading your
“Wells
Fargo Watch” page I wanted to share a Wells Fargo story with you, in
hopes that
you will post it. I am most curious to find out if other Wells Fargo
employees
have suffered the same fate as my husband. I am trying to write this
account
carefully so as not to reveal my husband’s identity. However, should
you need
more details to confirm the story, please let me know.
My
husband is – or was -- a personal banker
with Wells Fargo. Over a month ago, one of his regular customers
presented a
$4,000 check for deposit to her account. My husband followed Wells
Fargo
security procedures to deposit the check to the woman’s account,
cautioning her
that the funds would not be available to her for at least 4 business
days.
Unfortunately, the check proved fraudulent, part of the widespread and
apparently sophisticated “mystery shopper” scam. The customer, who
claims to
have been duped by the offer she received in the mail, had already sent
$3,500
to the scammers’ account.
Despite
the fact that Wells Fargo employees
all over the U.S. and Canada have accepted these fraudulent checks for
deposit,
my husband was singled out – as far as we know – by Wells Fargo, and
accused of
complicity in the mystery shopper scheme. Wells Fargo immediately
placed him on
“paid administrative leave, pending investigation”. He was instructed
not to
contact any Wells Fargo team member, but to await a call from a local
Wells
Fargo Human Resources representative. Twelve days later, Wells Fargo
stopped
his paycheck. To this day, four weeks later, Wells Fargo has still not
contacted us, and the Human Resources representative has not returned
any of my
husband’s numerous phone calls.
Needless to say, this has
been a
financial disaster for our family. Not only have we lost my husband’s
paycheck,
as far as we know he has also lost his job. If he is terminated under
these
conditions he will be unable to “bond” to work as a banker ever again,
so in
that case he’s lost his career as well. Worse, without an official
termination
from Wells Fargo, he cannot apply for unemployment compensation, or
request
payment for his accrued paid leave, etc. He is essentially in limbo.
We consulted an attorney,
only to
learn that there is absolutely nothing we can do about this situation,
we can’t
force Wells Fargo to respond to us. And if Wells Fargo does eventually
terminate him, we cannot challenge it: we reside in an “employ at will”
state,
in which a company may terminate any employee at any time for any
reason, or
for no reason at all.
Update
of November 10, 2008: How will the bailout
funds be used? For opportunistic mergers, as we noted last week. And
now we can
say, for political contributions and lobbying. ICP Fair Finance Watch
was
interviewed
on November 7
"
Wells Fargo & Co.,
which announced a deal for Wachovia last month, gave out nearly $1
million
through its PAC in this election cycle, according to an analysis of
Federal
Election Commission reports. Wachovia Corp. PACs gave $1.2 million.
Wells Fargo
& Co., which announced a deal for Wachovia last month, gave out
nearly $1
million through its PAC.... Wells Fargo spent $3.6 million lobbying
federal officials
over the same period."
There is no commitment that
the bailout
funds will not be put to these uses.
Update of October 27, 2008: From Dow Jones on the Fed's self-approval of Wells Fargo - Wachovia: " The Fed said a commenter had requested a public meeting, but the Bank Holding Company Act does not require the board to grant that request. A Federal Reserve spokeswoman wouldn't disclose the name of the group that had requested the hearing." So now, like North Korea, the Fed tries to cover up even who has commented. For the record, ICP Fair Finance Watch made the request...
Update
of October 20, 2008: It's telling, in terms
of how sloppy the corporate giveaways have been, that neither the Fed
nor
Treasury thought through how buying warrants in Wells Fargo would put
Wells in
the position of reducing book value or recording a loss. Expect the
rule
changing for the biggest banks to continue...
Update
of October 13, 2008: Tales for a time of
lawless regulators giving rubber stamp bank merger approvals without
any public
notice or comment -- while Inner City Press / Fair Finance Watch has
already
commented to the Fed demanding they hold a comment period on Wells
Fargo's
proposal to buy Wachovia, now Wachovia says it will bypass its own
shareholders
-- with the NYSE's rubber stamp. Note to Fed: this doesn't make it an
emergency
to bypass the public too. But the Fed on Friday said, vaguely, that it
will
begin "immediate consideration" of Wells Fargo's application. But no FDIC involvement = no emergency.
Update
of October 6, 2008: With Wells Fargo's
announcement that is it outbidding Citigroup for Wachovia, and would
consummate
its proposal, without FDIC assistance, by the end of the year the
question
arises: how could the regulators bypass public notice and comment on a
transaction that has no FDIC involvement?
Citigroup's
low-ball $2.16 billion supposed deal, announced Monday, had rubberstamp
approval with no public notice or comment, including under the
Community
Reinvestment Act on CitiFinancial's widespread involvement in
controversial
subprime lending. Now, in the face of
Wells
Fargo's announced, the regulators have rushed out a strange press
release:
Statement
by the Board of Governors of the Federal Reserve and the Office of the
Comptroller of the Currency
A new
proposal to acquire
Wachovia has emerged from Wells Fargo.
The Citigroup proposal has undergone extensive review by the
Federal
Reserve and the Office of the Comptroller of the Currency.
We have not yet reviewed the new Wells Fargo
proposal and the issues that it raises.
The regulators will be working with the parties to achieve an
outcome
that protects all Wachovia creditors, including depositors, insured and
uninsured, and promotes market stability.
The scuttlebutt is that the regulators,
although having no basis to waive public participation this time, are
considering doing it, among other things to equalize the playing field
between
Citigroup's and Wells Fargo's bid. It is clear which bid is financial
superior
-- but Wells Fargo, too, has been involved in predatory lending,
through Wells
Fargo Financial and overseas. Some
advocates are saying they prefer the Wells proposal on the basis that
it should
finally allow some public process in the spate of supposedly emergency
mergers
and conversions.
Update of August 25, 2008: From the mailbag -
Subj:
Wells Fargo Mortgage Complaint
From:
[Name withheld in this format]
To:
Inner City Press
Date:
8/15/2008 12:58:48 P.M. Eastern Daylight Time
Hello,
I found your website today. My dealings with America's Servicing
Company owned
by Wells Fargo has been a constant struggle. Today, I am mailing a
complaint to
the Texas Dept. of Banking and Mortgage Lending as well to Barney
Frank,
Chairman of the House Committee on Financial services. The committee
passed HR
5579 which directed lenders to speed the loan modification process. I
made my
request to ASC/Wells Fargo in April 2008. I have yet to receive a
response.
Also, I have been unable to speak to anyone who might be 'working' on
the loan
modification.
Yep,
that's Wells Fargo...
Update
of August 4, 2008: Talk about a conflict of
interest, and regulatory capture -- last week, the regulators and four
big
banks issued coordinated press releases. "Officials from banking giants
Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo
& Co. issued a joint statement saying, 'We look forward to
being leading
issuers as the U.S. covered bond market develops.'" And those they
issued
the statement with and for are supposed to objectively oversee them...
Update of May 26, 2008: In a motion filed last week, Baltimore says Wells Fargo uses predatory lending practices in Baltimore's predominantly African American neighborhoods "to make a quick profit because it believes it can successfully exploit those communities" by
Charging higher interest rates;
Underwriting certain types of adjustable-rate mortgages without regard
for
whether the borrower can repay after the initial "teaser" rate
expires;
Stripping borrowers' equity through unnecessary refinancings;
Paying rebates to mortgage brokers for inflating interest rates;
Requiring prepayment penalties that prevent borrowers from getting help
through
refinancing;
Charging excessive points and fees with no corresponding benefits to
the
borrower.
Yep, that sounds
like Wells Fargo...
Update
of May 12,
2008: This week from the mailbag, from inside Wells Fargo
Financial --
Subj:
Attention Inner City Press
Date: 5/2/2008 2:10:09 P.M. Eastern Daylight Time
From: [Name withheld upon request]
To: Inner City Press
I am
currently a Wells Fargo Financial employee. I
didn't know if you would be interested or
not but I have some interesting information you may want to look into
further. I've been with Wells Fargo
Financial
since [redacted to preserve confidentiality of whistleblower]. I came right out
of school and landed what I thought was a great career with a great
company. Little did I know that I am
actually a consumer lender in the subprime mortgage industry. Our main product is our Real Estate refinance
which is subprime. The average rate is
about 10.5%. My belief is that wells
fargo financial is now downsizing and have found a clever way to lay
off a lot
of employees without getting into headlines as officially laying people
off. We have seen a huge decline over the
last six
months. I come from a smaller state,
last year around march of 2007 we had 50-some full time selling
employees. We are now down to 20-some. People
are leaving left and right and I am
hoping to get out of here by the end of summer.
I am an assistant branch manager. I have two points of interest
that I would like to let you in on to see what your opinion is about
the
situation.
Point
number 1: New Performance
Improvement Plan process (The PIP process as it is referred to here
regarding
the process of terminating a team member)
The
process used to be that if you did not book 100k of new money lent
over a 2 month period you were given a month to do at least 50k and
over the
next three months to book 150k total of new money to get off of the
PIP. If you
did not reach this, the company could recommend termination. It has only happened to two team members
since I have been with the company.
The
new pip process is as follows, if you have one month without doing
50k of new money you can be recommended for termination.
You have the following month to do 50k and if
you do not you are out basically.
Another process that has changed recently that leads me to
believe that
we are currently downsizing is that processor role in our branches. A processor processing all of the payoffs,
paid outs, deals with title work, and insurance as well as ordering
supplies
for the branch and maintaining the current loan pipeline.
Every branch had one processor, until this
month. There are only 3 main processors
in our district now, (there are 7 branches in our district) the other 4 have now been placed into part
time,
glorified secretary rolls. A processor
now has up to 2-3 branches each to process for and did not receive any
type of
pay increase as a result outside of performance branch based bonuses. Some of the part-timers have already decided
to quit and there isn't any rush to replace them.
Point
Number 2: Sub-Prime loans and Prime loans or (A-Paper Loans)
Our
business model is confused.
We are supposed to be subprime lenders, we sell to customers
with 620 or
below fico scores, that is our target market.
Anyone who has been in a sales position knows that sales is
about
persistence, hard work, and of course leads.
Our lead base is mainly retail sales finance accounts (ex:
tractor
supplies financing, heating and cooling, carpet, furniture stores etc.) Most of these customers usually finance with
12 months same as cash periods or 24 months same as cash periods etc. Lately things are tight you basically have to
have at least somewhat decent credit to get approved for this financing. Somewhat decent credit is above 620 fico
score. Most of these retail sales
accounts are 700 credit score customers and so forth.
Our job is to call these customers and
service those accounts and cross sell, credit cards, auto loan
refinancing to
pay off credit cards, and most importantly real estate restructuring. Taking the equity you have in your home to
combo other bills to put them into one ultimate loan with a lower
payment and
hopefully an overall lower total payback (which is rare).
Most
of these customers could go to their bank and do the same thing at
a much lower interest rate. Our company doesn't want us selling prime
loans because
we don't make money on these loans. If
we book a loan and it ends up going prime we do not receive credit for
it as a
unit or a loan. We do get paid 175 bucks
for each prime loan we book but if you do nothing but prime loans you
will show
no new money credit for these loans and zero units thus making it look
like you
didn't do anything. As a result you
would be pipped and begin the process of termination.
There is a way for us to keep a prime
customer from going prime, if we can convince the credit grade A, no
matter
what the fico score it could be and 850, to take a loan over 91% of the
total
loan value (example 100k home value, 91k loan amount) it will not go
prime.
The
tricky part is this, we as team members do not know what rate the
customer will qualify for, we have a matrix, every customer falls into
a
certain pricing non-prime grade meaning a 720 credit score can come up
and it
will show up as a 10% rate but if you go below 91% ltv it will show
that it can
be recommended for prime pricing.
Let me
give you a recent example:
I had
a 736 fico customer coming in wanting to do a 124k total loan on a
home he just had appraised about 6 months ago for 137k.
The appraisal itself was done by a friend of
the customers to purposefully bring it down because the loan he was
trying to
complete was the result of a divorce. I
still took the chance and put in the total value as 137k.
At a 124k total loan his total interest rate quoted
was 9.38%. He had no choice, because of
the way he was paid the bank would not cash flow him but we are very
conservative
as well but we were able to legitamitly cash flow him for the loan. (wells fargo doesn't mess around when it
comes to cash flowing loans, we get heavy documentation) We got an
appraisal
done (wells fargo also doesn't mess around when it comes to appraisals,
we have
absolutely no contact with the appraisers, we have a separate company
that we
pay to have the contact) the appraisal came back for 185k.
So obviously at this point, it would be tough
for me to get this loan up to 91% ltv.
For me it was simple, i want to do the right thing but at the
same time
i have to book loans, they put pressure on you to book it subprime, i
tried
like hell to sell 91% loan and nearly succeeded. The
customer ended up only taking an extra
15k which still kept it below the 91% required to keep it from going
prime. Still at this point i am not able
to disclose to the customer that all he had to simply do was take any
loan
under 91% and he would simply sign the final pricing disclosure showing
a 9.38%
rate but after a final review it will come back and give him a 5.5% -7%
loan. I still had to sell with the
customer having the intentions he would be getting a 9.38% rate. We sent up the final pricing disclosure it
was recognized as prime and the customer ended up with a 5.5% fixed
rate for 30
years to his surprise and glee. That
turned out great, of course it looks like I never booked a loan. Second scenario would have been if the
customer had agreed to take an extra 60k out putting him over the 91%
ltv mark
and thus keeping the loan at 9.38% for a 720 fico customer. We can never inform them of this until after
they agree to a higher rate like that is what they are getting and they
get a
prime loan. If i would have booked this
loan subprime in that particular month i would have received over 1k in
total
bonus money. Instead, I didn't hit the
mark required for bonus money and only received the 175k for booking a
prime
loan.
This
is of course a Cover Your Ass scenario for wells fargo but believe
me, it is not a good thing to book a prime loan, i had my district
manager
yelling at me for not being able to sell the extra 60k because once it
is prime
it doesn't count for the branches records, or the districts record or
the
regions record. No one gets credit.
That
is my fundamental reason for wanting to leave wells fargo
financial. I know we are in business to
make money, but not at the expense of humanity.
We
aim to have more on this...
Update
of May 5,
2008: from the Washington Post of
May 2
we have the story of the owner of the Shark Club of Bethesda, John A.
Tsiaoushis, in league with a gaggle of predatory lenders including
Wells Fargo.
For a house on Pennycress Lane, in January 2005, while Tsiaoushis owed
more
than $588,000 on the mortgage, he sold the house without repaying it.
Court records
show he created documents purportedly from the mortgage company, opened
a post
office box in Beltsville and had the settlement company send checks
totaling
$586,000 to the "mortgage company's" post office box, which
Tsiaoushis then deposited. Using friends and associates, Tsiaoushis
helped
refinance the house for subsequent buyers. In each case, checks
settling the
transactions were sent to post office boxes opened by Tsiaoushis, court
records
show, after he presented phony documents indicating that all liens had
been
resolved. Court records show that CitiFinancial of Falls Church paid
more than
$670,000 in a refinancing scam; Accredited Home Lenders of San Diego
paid
$891,000 to "buy" the house; and Wells Fargo in Alexandria lent
$585,000 in a refinancing scheme. First Franklin Financial of San Jose,
which
made the original, legitimate mortgage on the house, is owed $588,000,
court
records show."
When
sleazy lender First Franklin is the
"legitimate" lender in a story, and CitiFinancial and Wells Fargo
come in later without any due diligence, you get a picture of the
corporate
role in the current crisis....
Update of April
14, 2008: As Wells
Fargo claimed to cut back on subprime lending in 2007, a new ICP Fair
Finance
Watch study has found that Wells continued making super high cost loans
subject
to the Home Ownership and Equity Protection Act (HOEPA) -- that is, at
least
eight percent over comparable Treasury securities. Using 2007 Home
Mortgage
Disclosure Act data that was required to be released on March 31, ICP
Fair
Finance Watch has found that Wells Fargo, while making 381 HOEPA loans
in 2007,
placed African Americans in subprime loans 2.43 times more frequently
than
whites, and denied the applications of Hispanics 1.56 times more
frequently
than whites. The HMDA data for 2007 is the fourth year in which the
data
distinguishes which loans are over the FRB-defined "rate spread," of
three percent over the yield on Treasury securities of comparable
duration on
first lien loans, five percent on subordinate liens.
More analysis will follow.
Update of March 10, 2008: Foreclosure tale from New York, by a charter-bus driver in the East Bronx who has a mortgage payment that went from $2,482 to $3,500 a month. I had a two-year teaser rate, now going up every six months to a maximum of 13.2 percent, "I spoke to Wells Fargo. I tried to get them to keep the rate at the teaser rate, 6.8 percent... I'm in a home that cost us $35,000 in the sixties. We refinanced three times, and we owe $400,000."
Update of March 3, 2008: Now Wells Fargo must file reports on its mortgage delinquencies and foreclosures with the Office of the Comptroller of the Currency. Information from October 2007 through February is due by March 31. Better late than never.
Update of January 21, 2008: In further chickens-coming-home-to-roost news, Wells posted its first decline in earnings in six years, with profits down 38%...
Update of January 14, 2008: Wells Fargo was sued last week by the City of Baltimore for predatory and discriminatory lending. The U.S. Conference of Mayors projected that 361 metropolitan areas would take an economic hit of $166 billion in 2008 because of the foreclosure crisis. The Baltimore area was expected to lose more than $1.6 billion in economic output, according to the Conference of Mayors...
Update of July 2, 2007: The National Association of Securities Dealers has fined Wells Fargo Securities LLC $250,000 for not disclosing that a series of research reports about Cadence Design Systems Inc. were written by an analyst who was seeking a job with the semiconductor designer...
Update of May 21, 2007: From a report last week, 2006 subprime mortgage volume and status of Wells Fargo $27,869 Restated B&C volume, cut jobs, tightened menu.
Update of April 30, 2007: The Case of Wells Fargo and the Squishy Bed, Abusive Calls
From: [Name withheld in this format]
Date: 4/26/2007 10:37:42 AM
To: Inner City Press
Subject: Wells Fargo
Hello, In April 2006 I purchased a set of mattresses from a local
furniture company, Banner Mattress. Their finance service is with
Wells Fargo. The terms were no interest until 2010. I was
never told there were to be minimum payments or when/if they were
due.
Years ago I purchased new appliances from Home Depot and had the
same terms. I chose to pay them off in full on the date it was
due. I did so with no problem. Well immediately I started
receiving phone calls from Wells Fargo telling me I was late and would
be charged a $35.00 late charge. I told them that's impossible I
have a no interest loan until 2010. Needless to say I paid them
through my online banking account the $35.00 plus $35.00 late
charge=$70.00. There was no date given as to what would be a
PAYMENT DATE. Another time I spoke with the caller and
when I asked why they kept calling me after I paid them he shouted at
me and said they never received the payment. While talking to him
I went to the bank's web page and pulled the payment history for Wells
Fargo. Not only had they received payment it told me the day and
each month thereafter a payment for $35.00 He told me he would
call me non-stop if he had to. They continued to call/harass me
NINE times a day SEVEN days a week. I stopped answering the phone
when I saw it was them.
The pillow top mattress slowly became defective four months after
I got it. I thought I was imagining it as the salesman
specifically told me it would "bounce back immediately". After
stopping into the store I was told to give it some time. I did to
the point I was waking up each night and the next morning with a
terrible backache. I then sent an e mail to Simmons explaining
the problem which they never responded to. I again went to the
store and insisted he make a formal complaint. With that he sent
someone out to measure the depth of the permanent
depression=1 3/4".
The store contacted me a week later and told me their
representative from Simmons said they would replace it. At this
point with all the hassle from Wells Fargo and now a defective
mattress, I said no, I wanted my money back. The store called
back and said their Simmons contact refuses to return the
mattress. I then called Simmons myself and was rudely told the
same thing by someone there. At this point I called the store
back and told them the same thing I did Simmons, fine I would write a
letter to the Attorney General's office and to the BBB. Debbie at
the store told me to hold off as I wasn't the only one having problems
with Simmons and she would see what she could do. A week later
she called back and said they would return it and repay me what I had
paid Wells Fargo.
Herein lies the problem. I paid Wells Fargo $245.00 in 2006 and
$105.00 in 2007(online bank statements as proof). They told
Banner I would only receive $280.00 back as I had 8 late charges of
$25.00 each. The store and I both do not understand how they can
say this as that is not what the salesman presented as the contract
when purchasing the mattresses. Before I call Wells Fargo I would
like to know what I can tell them to get my full refund? How do
you fight a company who treats their customers as badly as they do by
harassing phone calls each and every day to an obsessive amount of nine
times?
Update of April 23, 2007: From the mailbag --
Subj: Wells Fargo Auto Finance
Date: 3/27/2007
From: [Name withheld in this format]
To: Inner City Press
I purchased a vehicle in February of 2006. It was financed through Wells Fargo Auto Finance. From February to November everything was fine. Then everything started to unravel. We made our November and December payments. Then on December 28th, we got a phone call from collections saying that we were 9 days late on our December
payment. I assured them that we were not. I told them the payment was made on December 19th. They informed me that payment was to cover November's payment.
I went back to check my bank statements. The November payment cleared on the 21st of November. The December payment cleared on the 22nd.
Come to find out, Wells Fargo received my November payment, but claims to have reversed that payment and sent it back. Unfortunately, that money was never received by me or my bank. So I faxed my bank statements showing the payment being deducted from my account and a confirmation number showing it going to Wells Fargo.
I get 4 to 5 calls from collections everyday, unless I ask to be removed from the call pool. Then I only get calls every 5th day. They claim that I am behind. They are assessing $10 late fees all over the place and reporting my payment history to the credit bureaus. All because they cannot see that they made a simple mistake and correct it.
Do you think that anyone has actually taken the time to apologize for all of this? One person named Wayne was very apologetic...and I felt he was sincere. I have talked to approximately 100 people...and only one had the guts to say that Wells Fargo should not be taking this long to correct the issue. As others have stated, I will never again do business with Wells Fargo.
Update of April 2, 2007: From the mailbag --
Subj: Wells Fargo Auto Finance
Date: 3/27/2007 10:29:50 AM Eastern Standard Time
From: [Name withheld in this format]
To: Inner City Press
I purchased a vehicle in February of
2006. It was financed through Wells Fargo Auto Finance.
From February to November everything was fine. Then
everything started to unravel. We made our November and December
payments. Then on December 28th, we got a phone call from
collections saying that we were 9 days late on our December
payment. I assured them that we were not. I told them the
payment
was made on December 19th. They informed me that payment was to
cover Novembers payment. I went back to check my bank statements.
The November payment cleared on the 21st of November. The
December payment cleared on the 22nd.
Come to find out, Wells Fargo received my November payment,
but claims to have reversed that payment and sent it back.
Unfortunately, that money was never received by me or my bank. So
I faxed my bank statements showing the payment being deducted from my
account and a confirmation number showing it going to Wells Fargo.
I get 4 to 5 calls from collections everyday, unless I ask to be
removed from the call pool. Then I only get calls every 5th
day. They claim that I am behind. They are assessing $10
late fees all over the place and reporting my payment history to the
credit bureaus. All because they cannot see that they made a
simple mistake and correct it.
Do you think that anyone has actually taken the time to apologize for
all of this? One person named Wayne was very apologetic...and I
felt he was sincere. I have talked to approximately 100
people...and only one had the guts to say that Wells Fargo should not
be taking this long to correct the issue.
I am getting ready to turn this over to the Better Business
Bureau. Hopefully the can help me out. Because as we all
know, Wells Fargo is not doing it. As others have stated, I will never
again do business with Wells Fargo.
Update of March 5, 2007: From the mail bag:
Subj: Wells Fargo And ASC
From: [Name withheld in this format at] malmstrom.af.mil
To: Inner City Press
I have been with Wells Fargo for a number of years. Not been a stellar client as far as my checking account goes I am ashamed to admit. But I am admitting it because it helps make sense of what recently happened. Christmas time I happened upon a secret shopping opportunity through what I thought was a trusted internet site. I proceeded to deposit the check assuming that Wells Fargo verifies funding. They held the check and released the money to me. As I turns out I was defrauded and the cashier’s check was stolen. When I asked Wells Fargo what happened to the verification, they stated that, “We only verify checks that are suspicious.” I told them that I had not been a stellar client and didn’t they think that a deposit of $4700 to an account that has NEVER had $4700 in it before would be suspicious? I mentioned to them that they at one time held a check for $300 from my father for three days. They are still holding me responsible for the money!
And they also sold my mortgage to ASC where I have had many problems with billing. Lost checks, late payments, etc. I had no idea that this info existed. Suppose I will be refinancing now!
Update of February 26, 2007: Wells Fargo last week gave WARN Act notices to 250 subprime lending workers in South Carolina...
Update of January 1, 2007: We begin the year with a blind item. Which person recently ejected from Wells Fargo Mortgage in Milwaukee after being charged with race discrimination has resurfaced at Chase Mortgage? And isn't there some duty to tell future employers, to protect future consumers?
Update of November 20, 2006: Wells Fargo Auto Finance brags that its "Full Spectrum Pricing'' program enables the bank to serve prime and nonprime customers -- more predatory lending...
Last week Inner City Press sat down for an interview with the president of the Nagorno-Karabakh Republic, Arkady Ghoukasyan, and asked him about the fires, about the United Nations and other matters. Click here for the footage, on Google Video.
Update of October 2, 2006: Florida is suing a "Tampa-area company called Global Information Group Inc., claiming it made thousands of calls impersonating customers of companies including Verizon Communications Inc., tricking them into providing private call records. Earlier this year the company's principals agreed to pay $250,000 to settle the case, and to cease any pretexting activities." Global Information's customers include Wells Fargo...
Update of August 28, 2006: Wells Fargo sleaze, from the LA Times: Wells Fargo's supposed safeguards for detecting illicit banking activities by terrorists, drug smugglers and other criminals were so weak that federal regulators should have publicly reprimanded the San Francisco-based bank, according to a Treasury Department report released last week. Instead, senior banking regulators met with Wells Fargo CEO Dick Kovacevich, then overruled their own staff by letting Wells off with an informal enforcement action -- sparing Wells the scrutiny and embarrassment suffered by other banks that have been forced to disclose that regulators faulted their oversight systems.
"We believe that [the Office of the Comptroller of the Currency] should have acted more quickly and forcefully to require Wells to strengthen its compliance and that OCC's failure to take formal enforcement action against Wells sent the wrong message to the banking industry about OCC's resolve to ensure that banks comply" with the Bank Secrecy Act, the inspector general's report said. The OCC staff recommended Feb. 4, 2005, that a formal cease-and-desist order be issued to Wells Fargo. Dick Kovacevich met five days later with top OCC officials, including Acting Comptroller of the Currency Julie Williams, who was then running the agency. After that meeting, the OCC pulled the recommended action from consideration by its top supervisory review committee, according to the report. On April 12, 2005, a new memo was issued recommending that the agency take informal action. Who's put at risk by Wells Fargo's laxities? For or with more information, contact us.
Update of July 31, 2006: More Wells and furniture: "El Dorado Furniture's success with its private-label credit card program has earned it the Wells Fargo Financial Retail Services Client Award. Wells Fargo presents the award to deserving clients based on program participation and credit card sales volume. 'We are honored to be recognized for our successful partnership,' said Robert Capo, vice president of the nine-store Florida retailer"...
Update of July 24, 2006: Wells Fargo last week missed Wall Street earnings expectations by a penny in the second-quarter because it sold off adjustable rate mortgages and debt securities in the quarter at a $250 million loss. In Wells furniture news, this: "La-Z-Boy is a brand name consumers have known and trusted for close to 80 years," said Dan Abbott, president of Wells Fargo Financial Retail Services. 'We look forward to helping them continue to build brand awareness and attract new customers with the La-Z-Boy Furniture Galleries MasterCard credit card program.'" What's next? Water beds?
Update of July 17, 2006: Wells Fargo is the eighth largest services of subprime mortgages in the country, with $25 billion, an increase of 3.39 percent from the year before...
Update of July 10, 2006: Indictment from another angle: environmental advocates note that Wells Fargo has invested millions of dollars in Massey Energy, which they say is destroying Appalachian communities with mountaintop coal removal...
Update of July 3, 2006: From Canada NewsWire of June 27: "Wells Fargo Financial Canada is looking for a bigger share of the non-prime mortgage market"...
Update of June 26, 2006: Mattress work, from a press release last week: "Mattress Firm, the No. 1 retailer of Sealy Mattress products, was recently honored as a recipient of the Wells Fargo Financial Retail Services Client Award... 'Mattress Firm continues to demonstrate its commitment to acquiring new customers and encouraging repeat purchases'... said Mark Hicks, senior vice president for Wells Fargo Financial Retail Services."
Update of June 19, 2006: From "The Oregonian" newspaper of June 15:
"Federal Home Mortgage Disclosure Act statistics analyzed by Wells Fargo Home Mortgage, for example, show that single women took out 13,246 home mortgages in the Portland area in 2005, about 20 percent of all loans for purchases. That's roughly in line with the Realtor association's national average. The numbers crunched by Wells Fargo also suggest, however, that single males made 16,389 purchases in the Portland area during the same period, or 25 percent. That's significantly higher than the association's numbers. The problem is that the two sets of numbers don't allow for apples-to-apples comparisons. Walter Molony, spokesman for the National Association of Realtors, said the federal HMDA numbers don't include cash purchases and mortgages from small lenders. So they show only part of the picture, he concludes."
So now Wells Fargo is "crunching" HMDA data for newspapers? But Wells Fargo elsewhere says that HMDA data don't prove anything....
Update of June 12, 2006: From the mail bag:
Subject: Fair Finance Watch
From: [Name withheld]
To: WellsWatch [at] innercitypress.org
Sent: Fri, 9 Jun 2006 10:53:14 -0400
Fact of impossibility- My husband and I were recently approved for financing by Prosperity Mortgage (brokers affiliated with Wells Fargo) at 58% debt to income ratio. Our current annual salary puts us at the 28% federal income tax bracket. It is obvious that we do not have the means to make the payments of these expenses. How is it possible that we were approved if the payments are impossible to make? Aren’t mortgage companies in the business of making money- not reselling properties that have been foreclosed upon?
You'd think...
Update of May 15, 2006: In all the talk of Wachovia's Golden West deal last week, the Charlotte Observer noted that it makes any "link up" between Wells Fargo and Wachovia less likely. So where might Wells go? Fifth Third? Damaged goods...
Update of May 8, 2006: It's happened again. On May 5, Wells Fargo announced by press release that a computer containing confidential data about mortgage customers and prospective customers was missing and may have been stolen. Wells blamed it on "a global express shipping company" that had been delivering the computer from one of the bank's facilities to another. The missing data include names, addresses, Social Security numbers and mortgage loan deposit numbers....
Update of May 1, 2006: Corporate watch -- among the companies served or previously served by those who last week won Wells Fargo board elections by Saddam Hussein-like margins are US WEST, PricewaterhouseCoopers, Pacific Telesis Group, Agensys, Foster Pepper PLLC, General Mills, SUPERVALU INC., and T-Mobile. Calling all...
Update of April 24, 2006: Inner City Press / Fair Finance Watch has conducted a comparative study of 2005 Home Mortgage Disclosure Act data, this time focused on New York City, and has found Wells Fargo denied applications from The Bronx three times more frequently than applications from Manhattan in 2005. Meanwhile, in Des Moines last week, Dick Kovacevich bragged that "Our growth here is nothing short of phenomenal. One out of every 245 Iowans works for Wells Fargo." No talk of the underlying corporate welfare, nor of Wells' questionable subprime lending...
Update of April 10, 2006: The 2005 Home Mortgage Disclosure Act data, which Inner City Press / Fair Finance Watch received in late March from Wells Fargo, reveal that, considering all conventional first-lien loans, Wells Fargo in 2005 confined African Americans to rate spread loans 3.31 times more frequently than whites. The Federal Reserve has defined higher-cost loans as those loans with annual percentage rates above the rate spread of three percent over the yield on Treasury securities of comparable duration on first lien loans, five percent on subordinate liens. More analysis will be forthcoming. For now, we note that in 2005, Wells Fargo made 795 super high-cost loans subject to the Home Ownership and Equity Protection Act (HOEPA) -- that is, using one definition, at least eight percent over comparable Treasury securities. Usury, anyone? Developing.
Update of April 3, 2006: At the subprime lender Wells Fargo Financial, the beat goes on, from West Coast to East. In the news last week, in Lancaster, California at the Lancaster Town Center mall at 10th Street West and Avenue K. And east in Florida, at Wells Fargo Financial America Inc., 3280 N. John Young Parkway in Kissimmee. Predatory lending is on the move...
Update of March 27, 2006: the Federal Reserve has now asked about Santander's acquisition from Wells Fargo of the subprime lender Island Finance, asking for detail on Santander's due diligence on Island. Santander responds that it will file by March 29, and that it considered much about Island Finance, including Home Mortgage Disclosure Act compliance. We'll see...
Update of March 6, 2006: Payday lender ACE Cash Express last week put out a press release bragging that that it has "amended its existing bank credit facility" with the involvement of Wells Fargo Bank is the Administrative Agent and Co-Lead Arranger."
Update of February 27, 2006: Some are citing the Des Moines parking lot of predator Wells Fargo Financial as a good example of eminent domain. But wasn't / isn't it rather corporate welfare?
Update of February 20, 2006: Wells’ sell-off to Santander of Island Finance in Puerto Rico was rubber stamped by the FTC last week, via an early termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act…
Updated February 13, 2006: From the Buffalo News of Feb. 6: “In New York State, Wells employs 1,430 in offices in 47 cities. Its businesses statewide include Acordia, Wells Fargo Home Mortgage, Wells Fargo Century, Wells Fargo Equipment Finance, Wells Fargo Securities and Wells Fargo Financial.” That last one is the subprime… Also on Feb. 6, Wells Fargo announced via press release that “it has expanded its association with NASCAR's Petty Enterprises beyond Wells Fargo Financial, its consumer finance business, to encompass Wells Fargo Home Mortgage and all the company's business groups.” Petty subprime…
Update of February 6, 2006: In the run-up to Super Bowl XL in Detroit, Inner City Press / Fair Finance Watch has analyzed mortgage lending patterns in the Detroit Metropolitan Statistical Area in the most recent year for which data is available, 2004. At Wells Fargo Bank, N.A., American Americans were over 7.2 times more likely to be confined to higher cost loans than whites, and Hispanics were over 2.8 times more likely to be confined to higher cost loans than non-Hispanic whites…
Update of January 30, 2006: Santander has announced a proposal to acquire the problematic subprime lender Island Finance (on which ICP has previously commented to the FRB) from Wells Fargo. ICP first became aware of Wells Fargo's subprime lender Island Finance in 1997, when the company (1) opened an office at 2866 Third Avenue in the South Bronx which charged 25% interest rates to all customers, without regard to credit history, then (2) closed the office and required the customers they'd lured to travel to a Wells Fargo Financial office in Queens or have "lates" imposed on their credit history (see sVillage Voice of July 15, 1997). Wells' Island Finance is (sub-) headquartered in San Juan, Puerto Rico, and has branches in Panama, Aruba, the U.S. Virgin Islands, and the Netherlands Antilles. It is a high-rate lender, and is also embroiled in litigation with its employees. See, e.g., Jagroop v. Island Fin. V.I., Inc., (U.S. District Court for the District of the Virgin Island, Division of St. Croix), 240 F. Supp. 2d 370; 2002 U.S. Dist. LEXIS 25153. Tellingly, Wells CEO Dick Kovacevich lobbied in person in May 2002 against a proposal in the Puerto Rican legislature, House Bill 1288, to impose a usury cap of 19.75%. See, Caribbean Business, May 16, 2002, quoting 27% interest rates and Kovacevich that, with the proposed rate cap, " I feel I’m being told Wells Fargo is not welcome in Puerto Rico... I don’t want to be threatening, just factual," and characterizing Wells as the U.S.'s "number one 'NAFTA bank,' with more banking stores and assets than any competitor within 60 miles of Mexico and Canada." In acquiring Island Finance, Kovacevich said that it portended further expansion into other Latin American markets." (PR Newswire of May 4, 1995.) At the time, Wells stated that it had recently also "acquired Reliable Financial Services, Inc., an auto finance company headquartered in Rio Piedras, Puerto Rico, which manages $200 million in receivables." (PR Newswire of January 12, 1998.) Wells also lists "Island Finance" subsidiaries in the Cayman Islands, British West Indies, and in Trinidad and Tobago -- these are apparently not proposed to be acquired by Santander, although the precise scope of Santander’s proposal needs to be inquired into, publicly, by the Federal Reserve Board... .
Update of January 23, 2006: Pretending to be green, last week Wells Fargo announced the hiring of a new “of head of environmental finance.” He’s Barry Neal, previously a founding partner of El Paso Energy Corp.'s EP Power Finance LLC. How very environmental…
From the mailbag:
Subject: Wells Fargo Financial - Unfair and miss leading Business
Practices
Date: 1/18/2006 12:20:37 PM Eastern Standard Time
From: [Name withheld]
To: WellsWatch [at] innercitypress.org
I like to share this with your readers so to
warn them of this injustice. I took a loan for $7,500 in July of 2002
for home improvement from Wells Fargo Financial. The loan was
broken down to 60 installments of $182.38 totaling to 1,0942.80
from which $3,442.80 was the interests for 60 months. I paid off
the loan after I got my first statement in July of 2002. As
of December of 2005, I have been receiving statements for the amount of
$182.38.
I am told that although I paid off $7,500 I paid it towards my payments
ahead of time and not paid off the loan. So after 3 years, I
still owe Wells Fargo the interest on the original $7,500, which
amounts to $3,442.80. I spoke to the Customer service on
the phone and he kept saying the same thing and was unwilling to get
that I cannot owe any finance charges if I paid of the original loan.
I am surprised how a large financial institution will not understand
basic mathematics and is playing such tricks on their
customers. After having a saving account with
this organization for over 20 years, I plan to close my accounts and
move on with a more reliable and honest organization with some
integrity.
Update of January 9, 2006: Last week’s American Banker reminds of Wells and money laundering: “industry observers said the [new OCC] guidance was a clear response to questions raised last year about its supervision of Wells Fargo & Co. Senior OCC managers overturned the recommendations of field examiners that Wells receive a formal cease-and-desist order for anti-laundering lapses. A February memo recommended a public enforcement action, but after a meeting between Julie Williams, then the acting comptroller, and Richard Kovacevich, the chief executive officer of Wells, the memo was redrafted to recommend a less strict, nonpublic action…. The Treasury Department's inspector general is investigating the matter and is expected to issue a report next month.”
Update of December 26, 2005: The NASD on December 19 fined Wells Fargo $3 million, for abusive fund sale practices: steering investors into inappropriate fund share classes. Instead of selling class A shares Wells Fargo pushed class B and class C shares, which were less suited to the investors' needs, the NASD said. So: predatory in fund sales too…
Update of December 19, 2005: an APB from Salem, Oregon, where an employee of the subprime Wells Fargo Financial has moved over to the supposedly prime Wells Fargo Home Mortgage. Bringing predatory lending along? He could be asked – he’s pitching his number, at 503-982-2788… Higher up, selling at the top. Insiders at Wells, including Dick Kovacevich, sold a net 120,091 shares this quarter, according to SEC filings…
Update of December 12, 2005: Last week Wells CEO Dick Kovacevich said the company isn't interested in buying a stake in GMAC, stating that it wouldn't fit with Wells Fargo's usual strategy of not being a partial owner of business lines. This seems inconsistent with Wells' many "joint ventures" in mortgages, including subprime mortgages...
Update of December 5, 2005: Military personnel on active duty are being overcharged on high interest loans by banks including Wells Fargo, a new investigation of compliance with the Servicemembers’ Civil Relief Act (SCRA) by Inner City Press / Fair Finance Watch has uncovered. Through documents obtained under the Freedom of Information Act, ICP had documented widespread violations of the SCRA, defrauding and overcharging of those in active military service, and regulatory inertia in dealing with the abuses.
The Servicemembers’ Civil Relief Act, at 50 USCS Appendix Section 527(1)(a) provides that “An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year during the period of military service.”
The purpose of the SCRA, formerly known as the Soldiers’ and Sailors’ Civil Relief Act, is to provide interest rate relief and other protections “to servicemembers of the United States to enable such persons to devote their entire energy to the defense needs of the Nation.” Section 502.
Wells Fargo’s practices are reflected in the complaint to the OCC now online at www.innercitypress.org/wellsscra54.jpg
“On [ ] January 2003, my Army Reserve Unit, the [REDACTED] received notification of mobilization and deployment to the Persian Gulf area. Within days I received my individual mobilization order, which specifically stated I was mobilized in accordance with Title 10, a Presidential call up, in support of Operation Enduring Freedom. I contacted Wells Fargo whom I had 2 home equity accounts with, and advised of my mobilization and the fact that I was eligible to receive a reduced interest rate of 6% on my two outstanding home equity accounts per the Soldiers and Sailors Civil Relief Act of 194[0]… In mid July 2003 I returned to my residence from the Persian Gulf at which time I learned from my wife that Wells Fargo never reduced our interest rate to 6% as is required by Federal law…”
ICP will be pursuing these issues further. For or with more information, contact us.
Update of November 28, 2005: Inner City Press / Fair Finance Watch is analyzing Gulf Coast mortgage lenders in the Katrina-zone, identifying those which in 2004 had the worst disparities between the percentage of African American and white borrowers who were charged higher costs, over the Federally-defined rate spread of 3% over comparable Treasury securities on a first lien loan, 5% on subordinate liens. Interim results including this finding, that in the New Orleans Metropolitan Statistical Area, Wells Fargo Bank, NA in 2004 was 3.4 times more likely to confine African Americans to higher cost rates spread loans than whites…
Update of November 21, 2005: Wells Fargo disclosed last week that the “increased level of consumer
bankruptcies filed before new bankruptcy laws took effect Oct. 17 will
widen its
fourth-quarter net loan charge-offs by an estimated $175 million, or 7
cents per share,
after tax.” So Wells took a charge for
initializing effect. But after that, it’s all gravy...
Update of November 14, 2005: Feeling lucky? Last week Ameristar Casinos announced that that it has a new $1.2 billion senior secured credit facility arranged by... Wells Fargo Bank, N.A.. Meanwhile Wells also served as trustee on securities backed by subprime loans by Option One, which along with its affiliate H&R Block Mortgage makes more than 70% of its mortgages to African Americans in Missouri over the federally defined rate spread, of 3% over comparable Treasuries on a first lien, 5% on subordinate liens...
Update of November 7, 2005: Wells
Fargo has set aside $100 million to cover the impact that Hurricane
Katrina might have on
its loan portfolio. Howard Atkins, Wells' CFO, told the WSJ that the
bank continues to
evaluate the impact of Katrina. "We may find we don't need the $100
million," he
said...
Update of October 31, 2005: The M&A grapevine tolls for Fifth Third, with publications from New York, Minneapolis and Cincinnati all predicted last week 5/3’s imminent take-over by Wells Fargo. Birds of a CRA-arrogant feather may flock together. We'll see.
Update of October 24, 2005: Wells
Fargo Financial
saw its profit drop by 53% to $79 million. The company said that was
largely because the
division set aside $100 million to cover loans it expected to go bad
because of Hurricane
Katrina. But many of these loans were unaffordable and unsuitable prior
to any
hurricane...
Update of October 17, 2005: We must of course note the U.S. District Court’s decisions in the cases by the OCC and the Clearing House banks -- including Wells Fargo --against the NY Attorney General, to avoid providing the credit score information they say would justify the racial disparities in their lending. Why should the public believe a defense that they go to court to conceal? Whether or not an appeal is taken, and whether or not it’s successful, the public must demand that the OCC bring enforcement action(s) on Wells Fargo’s disparities, and must separately pursue them, far and wide and ceaseless...
Update of October 10, 2005: We
like edgy arts -- but
not by predatory lenders. Last week the David Rockefeller-founded
Business Committee for
the Arts have an awarded to the Wells’
subprime unit Wells Fargo Financial, which during the construction of
its lair in Des
Moines, allowed the surrounding wooden fence to become “a canvas for
murals by Iowa
artists.” How touching...
Update of October 3, 2005: From
CNBC of September 25:
BARTIROMO: Now Wells Fargo offers a high
percentage of sub-prime
lending, and in that kind of lending, you're talking about triple the
rate of
foreclosures. Is that a concern for you?
KOVACEVICH: Well, we have--you have to price for that risk when you
are--the most
important thing is that you give borrowers a chance to borrow money.
And these are riskier
borrowers and you have to charge a higher rate for that risk. But you
can't red-line this
group. These are people who need loans, who want to buy a home, and we
simply charge more
for the risk that we're taking. And so far, that has turned out to be a
good business for
us. But as importantly, it's allowed people to buy homes, get into home
ownership, that
they wouldn't be able to do if we didn't offer these products to
higher-risk, lower-income
people.
Question:
while not conceding those points, how do they address the non-mortgage
part of Wells
subprime lending? High cost furniture loans and the like?
BARTIROMO: And what's your take on the
current
national post-Katrina story about race divisions in this country and
the haves and the
have-nots?
KOVACEVICH: Well, I think unfortunately there is some of that. But I
think what we all
have to do is work together to make sure that we reduce and eliminate
any discrimination
of any type. And companies, I think, corporate America has to take a
leadership position
in this because it starts with employment. And if people are employed,
you know, they have
jobs; they can integrate well into society. And the real tragedy is if
you don't have a
job, and what we ought to do is make sure that everyone has a job and
not discriminate in
any way in employment.
We’ll see...
Update of September 26, 2005: We've looked closer at Wells Fargo's 2004 lending record, this time in the Nashville MSA, considering which loans are subject to a rate spread (3% higher than comparable Treasuries on a first lien, and 5% on a subordinated lien) -- Wells Fargo in the Nashville Metropolitan Statistical Area in 2004
Whites: 2009 originations, 187 over the rate spread (11.81% of loans over the rate spread)
African Americans: 198 origination, 59 (38.02%) over the rate spread -- 3.20 times higher than for whites...
Meanwhile, HUD last week announced a $48,000 settlement with Prudential Locations, LLC for violations of the Real Estate Settlement Procedures Act. HUD found that Prudential's Honolulu real estate brokerage office leased a luxury car, offered vacations and provided other gifts to reward sales agents that referred business to an affiliated mortgage company. Prudential is affiliated with and has a financial interest in Wells Fargo Home Mortgage Hawaii, LLC. HUD's investigation found that Prudential hosted a ‘First Annual Wells Fargo Friends Party’ and invited only those sales agents that referred over $1 million in business to Wells Fargo. Great...
Update of September 19, 2005: Wells Fargo Financial Acceptance trumpeted its subprime auto loans in Canada, naming its “Stagecoach Award” partners / co-conspirators, including St. Jean Mazda of St-Jean-sur-Richelieu, QC. How do you say predatory lending en francais?
Update of September 12, 2005:
From last week’s
Mercury-News: “Antonio Lopez and Fabiolo Estrada... said they were
contacted in 2003
and 2004 by phone by a broker from Wells Fargo
Financial, the
San Francisco bank's subprime lending unit. Convinced that refinancing
their East San Jose
home would help them pay off some department store bills and other
debts, the couple
refinanced in 2003 into a Wells Fargo loan with an interest rate of
about 7.4 percent.
Less than a year later, in early 2004, the broker suggested they
refinance again to lower
their interest rate. They got a 30-year loan with a rate of 6.25
percent for three years,
which could rise later when the loan became adjustable. What they
didn't realize, they
said, was that the two loans were netting Wells Fargo and their loan
representative a
whopping four "points" each -- $ 27,000 in total fees and commission.
It also
cost them an additional $ 17,000 for a "prepayment penalty" for paying
off the
2003 loan early. And their second loan would probably get steeply more
expensive in a few
years, requiring them to pay a lot more or refinance yet again. The
couple, who had
refinanced in the past, say they thought both loans had fixed rates for
30 years, and they
didn't know how much they were paying the broker or about the
prepayment expense. They
said if their loan representative told them, he explained it at "150
miles per
hour," Lopez said. "If I knew what I know now, I never would have
refinanced so
much," Lopez said. Wells Fargo said it cannot discuss the Lopez-Estrada
loan, but
said four points is standard when making loans to borrowers with
subprime credit standing.
The bank's senior vice president for its home and consumer finance
group, Lynn Greenwood,
said Wells Fargo would have taken into account any late payments on any
debts, credit
score and overall indebtedness when deciding the couple's loan rate.”
Update of September 5, 2005: On August 30, Wells Fargo announced what it
called
improvements to its lending practices. Many of the reforms are less
meaningful than
claimed. For example, any fanfare about dropping mandatory arbitration
now that
anti-consumer class action reforms have been passed, and the GSEs no
longer buy loans with
arbitration clauses, is misplaced. As set
forth in Inner City Press’ Gulf Coast Watch, in Louisiana in 2004, over
30% of Wells
Fargo’s mortgages in Louisiana were higher cost, rate spread loans. Click here for more of ICP’s Gulf Coast Watch.
Update of August 29, 2005: De rumores -- last week the British press was aflutter with the rumor that Wells Fargo would bid on Lloyds TSB. We’ll see...
Update of August 22, 2005: On the furniture loan beat: "’We have
seen favorable results with longer-term promotions, which allow
cardholders to spread
their payments out over an extended period of time, such as 12, 18 or
24 months,’
said Terry Fuller, senior vice president of business development for
Wells Fargo Financial
Retail Services.”
Update of August 15, 2005: On August 11, Wells Fargo settled for $34
million a
lawsuit accusing it of charging excessive credit card processing fees
to businesses.
Merchants accused Wells Fargo of extracting a variety of fees it never
disclosed, and
failing to explain the fees when asked. Sounds like Wells...
Update of August 1, 2005: From
the mail bag,
catching up:
Subj: WELLS FARGO
Date: 7/12/2005 8:06:32 PM Eastern Standard Time
From: [Name withheld]
To: WellsWatch [at] INNERCITYPRESS.ORG
FOR ABOUT 10 YEARS I HAVE HAD AN ACCOUNT WITH
WELLS FARGO AND NEVER
HAD PROBLEMS UNTIL JAN. 05, I HAD ARRANGEMENTS FOR MY CHECKING ACCOUNT
TO BE DEBITED
MONTHLY TO PAY MY CARNOTE. HOWEVER, I RAN INTO A PROBLEM AND WAS SHORT
OF MONEY ON THE DUE
DATE, AND CALLED THE BRANCH TO HAVE THEM WAIT 2 DAYS UNTIL THEY DRAFTED
THE PAYMENT, I
CALLED AND MADE THE ARRANGEMENTS FOR THE 30TH INSTEAD OF THE 28TH.
WELL, MY ACCOUNT WAS DEBITED ON THE 30TH
AND ALSO ON THE 28TH, WHICH
CAUSED BOTH TO BE NSF. I HAD NO IDEA UNTIL A WEEK OR SO LATER THAT MY
CHECKING ACCOUNT WAS
DEBITED TWICE IN 2 DAYS , WHICH OF COURSE, AS YOU CAN IMAGINE , MY
SHOCK AND HORROR OF
MANY NSF NOTICES IN MY MAILBOX. I CALLED WELLS FARGO TO FIX THE
PROBLEM, BUT JUST GOT THE
RUN AROUND. THEY TOLD ME TO CALL CUSTOMER DISPUTES , SO I DID , AND WAS
TOLD TO FAX A BANK
STATEMENT. I FAXED MY BANK STATEMENT, WHICH CONTAINED BOTH DEBITS AND A
NUMBER OF NSF
FEES, AND STILL AS OF THIS DATE , HAVE NOT HEARD A WORD. I HAVE TRIED
TO CALL CUSTOMER
DISPUTES AGAIN, BUT NO ONE WILL RESOLVE THIS ISSUE, AND NOW ,
MYSTERIOUSLY, CUSTOMER
DISPUTES DOES NOT EXIST. TO DATE, I AM BEING HARRASSED ON A DAILY
BASIS, WELLS FARGO
CLAIMS I AM A MONTH BEHIND ON MY CAR PAYMENT. A COLLECTOR CALLED ME AND
TOLD ME MY ACCOUNT
IS BEING REVIEWED BY THE REPO COMMITTEE, AND HE ALSO TOLD ME HE DID NOT
CARE WHAT WELLS
FARGO DID TO MY ACCOUNT AND FOR ME TO STOP TALKING IN CIRCLES , THAT I
STILL HAD TO PAY
THE NSF OR LOSE MY CAR. EVEN ON THE DAY THEY GET A PAYMENT, THEY WILL
CALL TO SEE WHEN I
AM GOING TO SEND ANOTHER. THEY CALL ME AT WORK , AT HOME SEVERAL TIMES
A DAY. I HAVE
THOUGHT OF CONTACTING AN ATTORNEY AND SUING THE HELL OUT OF THEM. I
HAVE NEVER MISSED A
PAYMENT. BUT THEY WILL NOT LISTEN TO ME OR RESOLVE THE SITUATION , OR
EVEN REFUND MY NSF
CHARGES THEY CAUSED.
Update of July 5, 2005: From the
June 30 American
Banker: “Some observers argued that any formal enforcement action would
have
prevented Wells from making acquisitions, such as the one it completed
last week for First
Community Capital Corp. of Houston. The $124 million deal was approved
by the Federal
Reserve Board, which noted that Wells was implementing improvements to
its anti-laundering
program. When the OCC memo became public, Wells' chief counsel, Jim
Strother, acknowledged
the anti-laundering problems and said his company was working to
correct them. He would
not discuss Wells' relationship with the OCC.”
Of course, the OCC is suing to shield Wells Fargo from a fair
lending inquiry from
the New York State Attorney General...
More Wells Fargo in the
shadows: the June
27 edition of the publication Furniture Today
reported that “buying group Furniture First says it will offer a
private-label credit
card program through Wells Fargo Financial Retail Services. Wells Fargo
will provide
Furniture First members with account management and sales support,
sales training,
individualized client support, integrated technology and custom
marketing solutions.
Furniture First said the program will include a dedicated line of
credit for approved
customers, promoting larger purchases,” etc..
Update of June 27, 2005: The
Federal Reserve’s
June 23, 2005, Wells Fargo order
The Fed also recites that ICP “expressed concern about Wells
Fargo’s and
WF Bank’s information-security systems and cited a press report
describing three
instances of theft of computers containing information relating to
customers of Wells
Fargo’s subsidiaries. Wells Fargo represented that it is not aware of
actual identity
theft or fraudulent activity as a result of these incidents and that it
provided
potentially affected customers with notice of the thefts and credit
bureau monitoring and
identity theft insurance services. In reviewing Wells Fargo’s
application, the Board
has considered the enhancements Wells Fargo is making to its
information security systems
and has consulted with the OCC, the primary federal supervisor of WF
Bank.” This in
an environment of accelerating violations of consumers’ privacy...
In
footnote 13, the Fed says that ICP “criticized Wells Fargo’s
relationships with
unaffiliated payday and car title lenders and other nontraditional
providers of financial
services. Wells Fargo represented that it has acted as a lender or
provider of credit
facilities and in other ordinary business relationships to unaffiliated
consumer finance
businesses, which may include payday and title lenders. Wells Fargo
stated that it does
not participate in the credit review process of such lenders and
customarily requires the
entities to represent, warrant, and covenant to Wells Fargo in credit
agreements that such
entities have and will comply with all applicable laws in the conduct
of their
business.” What’s being referred to
here includes Wells Fargo funding a payday lender that is explicitly
(and exclusively)
directed at active duty military personnel... Meanwhile
last week, the Air Force newswire reported that the “Defense Department
has launched
a new effort to educate servicemembers about the dangers of borrowing
from
‘loan-shark’ lending companies and to teach them how to avoid ending up
in a
spiral of compounding debt, a DOD official said here June 17. The most
prevalent type of
loan-shark lending affecting servicemembers is what is known as ‘payday
loans,’
said John Molino, deputy undersecretary of defense for military
community and family
policy.” But on the issue of Wells
Fargo’s lending to payday lenders which target military personnel, the
Fed has done
nothing...
The Fed also says that “although the HMDA data may reflect
certain disparities
in the rates of loan applications, originations, and denials among
members of different
racial groups in certain local areas, the HMDA data do not demonstrate
that the WF Prime
Lenders are excluding any racial group on a prohibited basis. The
Board, nevertheless, is
concerned when the record of an institution indicates disparities in
lending and believes
that all banks are obligated to ensure that their lending practices are
based on criteria
that ensure not only safe and sound lending, but also equal access to
credit by
creditworthy applicants regardless of race or income level.” So the Board is concerned. Where’s the action?
In note 34, the Fed says that ICP “criticized the customer
service and
complaint procedures of a Wells Fargo subsidiary engaged in subprime
lending in Puerto
Rico and urged the Board, without specific allegations, to closely
scrutinize the subprime
lending operations of Wells Fargo in general. Wells Fargo originates
subprime mortgage
loans through WF Financial and Island Finance, and numerous joint
ventures originate
subprime loans that are underwritten and processed through WF
Mortgage’s unit, Wells
Fargo Mortgage Resource. WF Financial and Island Finance are nonbanking
subsidiaries of
Wells Fargo. As the Board has previously noted, subprime lending is a
permissible activity
that provides needed credit to consumers who have difficulty meeting
conventional
underwriting criteria. The Board, however, continues to expect all bank
holding companies
and their affiliates to conduct their subprime lending operations
without any abusive
lending practices. See, e.g. Royal Bank of Canada, 88 Federal Reserve
Bulletin 385, 388 n.
18 (2002).”
When the Fed finally (has to) consider the 2004 data, it will
find at Wells Fargo
nothing but abusive lending practices...
Update of June 20, 2005: On June 16, both the Office of the Comptroller of the Currency and the Clearing House, a trade association of large banks, sued the New York Attorney General, seeking an injunction against investigation of disparities in the subprime lending of Wells Fargo and others...
Update
of June 6, 2005: The Wall Street Journal of June 1 reported on
Wells Fargo
lowering fees -- but only for some customers, in seeming contradiction
of the CRA, both
letter and spirit: “In order to qualify for the lower costs, customers
must have at
least $25,000 in combined balances across deposit accounts they have at
the bank, such as
checking, savings accounts, certificates of deposits and individual
retirement accounts,
as well as any brokerage accounts. Credit-card balances, auto loans and
as much as 10% of
any mortgage balances with the bank are also included.”
Hmm...
Update
of May 31, 2005: Predatory
lending is
not limited to mortgages, and is also being exported, including by
Wells Fargo. For
example last week Furniture First, “a national buying group serving the
retail home
furnishings industry,” signed a contract to offer a private label
credit card program
through Wells Fargo Financial Retail Services. The press release
specified: “Wells
Fargo Financial Retail Services, headquartered in Des Moines, Iowa,
specializes in
providing private label and dual-line credit card programs to retailers
in North America.
Its parent is Wells Fargo Financial. Wells Fargo Financial, a unit of
Wells Fargo &
Company, is a $38 billion company providing consumer installment and
home equity lending,
automobile financing, consumer and private label credit cards and
commercial services to
consumers and businesses. The company has approximately 19,000 team
members and operates
in 48 U.S. states, the 10 provinces of Canada, the Caribbean, Latin
American and the
Pacific Rim.”
Update of May 23, 2005: ICP on May 20 submitted to the Florida Attorney General’s office an analysis of and demand for action on the glaring disparities in Wells Fargo’s 2004 mortgage lending in Florida:
Whites:
71,777 applications,
leading to 10,071 denials (14.03% denied) and 50,226
originations; 2636 [or 5.25%] exceeded rate spread.
African Americans: 6694 applications, leading to 1922 denials
(28.71% denied, 2.05
times higher than whites) and 3589
originations; 855 [or
23.82 percent] exceeded rate spread [4.54 times higher / more likely to
be over rate
spread than whites].
Latinos: 18,729 applications, leading to 2636 denials (20.71% denied, 1.48 times higher than whites) and 7754 originations; 378 [or 4.87 percent] exceeded rate spread [0.93 times “higher” / more likely to be over rate spread than whites].
The Florida AG’s office has confirmed receipt... For or with more information, contact us.
Update of May 16, 2005: This week
we step back,
temporarily, from drilling ever-deeper into the 2004 Home Mortgage
Disclosure Act data.
Because we’ve been asked about the Wells Fargo - America’s Servicing
Company, we
note that Fitch’s September 21, 2004, ratings press release states that
“Wells
Fargo's third-party servicing division, America's Servicing
Company (ASC), services more than 184,000 loans totaling over $20
billion.”
Update of May 9, 2005: ICP Fair
Finance Watch
continues drilling deeper into the 2004 Home Mortgage Disclosure Act
data. Following its petitioning last week
of state
attorneys general, ICP was asked to produce a study of disparities by
gender as well as
race. The results, being forwarded to those who requested them, are not
pretty.
Here’s Wells Fargo:
White men: 554,755 originations of which 36,012
(or 6.49%) were at
rate spread
White women: 196,396 originations of which 21,514
(or 10.95%)
exceeded the rate spread (1.69 times higher / more likely to be rate
spread than white
men)
African American men: 29,858 originations of which
6357 (or 21.29%)
exceeded the rate spread (3.28 times higher / more likely to be rate
spread than white
men)
African American women: 25,278 originations of
which 7067 (or 27.96%)
exceeded the rate spread (4.31 times higher / more likely to be rate
spread than white
men)
Hispanic men: 55.126 originations of which 5763
(or 10.45%) exceeded
the rate spread (1.61 times higher / more likely to be rate spread than
white men)
Hispanic women: 19,276 originations of which 2843
(or 14.75%)
exceeded the rate spread (2.27 times higher / more likely to be rate
spread than white
men)
ICP has provided this and other analysis to the regulators and
state attorneys
general, demanding investigation and action.
And
here comes trouble: a building permit in Annapolis, Maryland for Wells
Fargo Financial, at
167 Jennifer Road...
Update of
May 2, 2005: At last week’s shareholders’ meeting, faced
with
criticism of his involvement on the boards of three other companies
(Cargill Inc., Target
Corp., and Cisco Systems Inc.), Dick Kovacevich insisted
that he gains insights into agriculture, retail, and technology from
those companies, and
that the insights benefit Wells. (Why then
he
doesn’t serve on the board of directors of a payday lender is unclear,
since Wells
proudly and defiantly wants to continue lending to them).
When the shareholder suggested that the CEO was
spreading himself too thin,
Kovacevich quipped, "You sound like my wife." We could joke, but this
is a
family newspaper -- most of the time, at least. Wells
Fargo’s disparate lending has now been raised to ICP/FFW to the
attorneys general not
only in New York but in dozens of other states. We’ll
see.
Update of April 25, 2005: Inner
City Press / Fair
Finance Watch has reviewed, now for the New York City Metropolitan
Statistical Area, the
2004 Home Mortgage Disclosure Act data of Wells Fargo, including the
new information
concerning which loans are subject to a rate spread (3% higher than
comparable Treasuries
on a first lien, and 5% on a subordinated lien), and has found the
following:
Whites: 11,028 originations of which 218 (or
1.98%) were at rate
spread
African Americans: 1756 originations of which 224
(or 12.76%) were at
rate spread (6.44 times higher / more likely to be rate spread than
whites)
Latinos: 1664 originations of which 74 (or 4.45%)
at rate spread
(2.25 times higher / more likely to be rate spread than whites).
The ICP Fair Finance Watch is on the case, for now analyzing Wells Fargo’s 2004 mortgage data in other markets.
Update of April 11, 2005: After
first providing its
2004 Loan Application Register data in PDF format -- to prevent
analysis, it seems clear
-- Wells Fargo last week after complaints decided to provide it
analyzable form. The results are not
pretty: At Wells Fargo for home
purchase loans, African Americans borrowers are 3.9 times more like to
receive a rate
spread loan that white borrowers. This is only slightly less disparate
that Citigroup, at
which African Americans borrowers are 4.34 times more like to receive a
higher-cost rate
spread home purchase loan that white borrowers. Meanwhile, Wells Fargo
denies the
applications of African Americans for home purchase loans 2.3 times
more frequently than
those of whites, nearly as disparate as Citigroup’s 2.6 to one denial
rate ratio
between African Americans and whites.
At Wells Fargo for all types of mortgage loans, African
Americans are 3.19 times
more like to receive a rate spread loan than white borrowers. As we’ve
noted, Wells
Fargo is also a major funder of payday lenders, including targeters of
military personnel
such as Armed Forces Loans, Inc.. ICP has raised this directly to Wells
Fargo, and to the
Federal Reserve on Wells’ proposal to acquire First Community Capital
Corp., which
was announced back on September 2, was challenged by ICP on November 1,
and which still
remains pending, more than five months later. ICP has now put in a
supplemental comment.
Developing...
Update of April 4, 2005: This
week it’s
logistic. On February 28, ICP Fair Finance Watch made a formal request
for Wells
Fargo’s 2004 mortgage lending data; the data by regulation must be
provided “by
March 31 for a request received on or before March 1.” ICP’s request,
directed
to the signer of Wells Fargo’s previous responses to ICP’s regulatory
comments,
also inquired as a fair lending matter about Wells Fargo’s “safeguards,
if any,
for purchasing from, securitizing or serving as trustee for and
otherwise assisting
(including through warehouse lending) other subprime lenders, including
payday lenders and
car title lenders.”
Wells Fargo waited the full month, then on March 31 provided its
data -- in PDF. In
this format it cannot be cumulated and analyzed and Wells Fargo knows
this. ICP wrote to
Wells Fargo
“immediately -- including in the context of Wells
Fargo’s
pending application to acquire First Community, on which ICP is a
timely commenter and
wishes to supplementally comment on the 2004 data -- to bring this to
your attention”
and re-requesting that the data be “provided in a single .DAT file,
allowing analysis
of the entire conglomerate’s patterns at one time.”
ICP has also
complained
to the Federal Reserve. Click here
Update of March 28, 2005: Among the range of Wells Fargo’s predatory
practices is the stealth almost disavowed “America’s Servicing Company,
on which
we’ve previously reported. Among the week’s mail were these two,
further on
Wells’ ASC:
Subj: ASC IS NORWEST
Date: 3/24/2005 8:28:54
PM Eastern Standard
Time
From: [ ]
To: WellsWatch [at]
innercitypress.org
I got a mortgage from
Argent loan and sold
to Ameriquest then to ASC which ended up as in CA.
ASC
do not have any license as dept. of corp and dept of real
state. Also my search
about "
http://www.ascservicing.com " I found out ASC are same as Norwest also
sub for wells
fargo and as 3/4/2005, ASC has some legal cases under
National City Home Loan, HSBC Bank, Wells Fargo Home
Mortgage, and more. ASC
as "servicer" for all but do not have license in ca. or others too. I
called
more than 10 times and no one provide me any info all is secret only
one person told me
call BBB. What about government agency?
Yep - Federal
Reserve,
OCC, the states (send a cc to Inner City Press if you like).
Subj: America's
Servicing Company
Date: 3/25/2005 4:09:00
PM Eastern Standard
Time
From: [ ]
To: WellsWatch [at]
innercitypress.com
In 2004 I built a home.
I had a
construction loan through a local bank. Permanent loan was then
obtained through RBC
Centura bank. This loan was sold to ACS.
Problems arose after ACS
purchased loan. I
was never notified that ACS had purchased loans. I continued to send my
mortgage payment
to RBC... RBC forwarded the installments to ACS for the first 60 days
after they had sold
loan to ACS. The installments RBC received from me after the 60 day
time frame were
returned to me with a letter stating they had sold loan to ACS in
December of 2004 and had
been forwarding my payments. The letter also advised the new mortgage
company should
contact me with account information etc.... I never received any
notification that ACS had
purchased the loan. I learned that I was in default and that I was
placed in collections.
I have Made repeated attempts to contact ACS to have this situation
resolved to no
avail....
Not only does this
company not comply with
fair lending and credit practices, they place accounts in collection
without due course
and process and without notification that they are the lender/mortgage
company....
This has placed a burden
on me as to impact
to my credit standing and ability to obtain a mortgage with a reputable
company. I am subjected to increased cost
of payments,
increased interest rates and will be forced to pay additional fees to
obtain
refinancing...
That’s Wells
Fargo...
Update of February 28, 2005: We'll focus this week
on three sides of
Wells Fargo: stealth servicing, disparate treatment, and the push into
subprime. Last week
(below), we reported on complaints about America's Servicing Company,
including a request
to know who owns it. ICP went
online
Our noting
this
has given rise to more inquiries. For example:
Subj: ASC bka
Wells Fargo
Date: 2/24/2005
1:06:56 PM Eastern
Standard Time
From: [ ]
To: WellsWatch
[at]
innercitypress.org
I just recently
stumbled across your
web page while i was doing some research about America's Servicing
Company.
I am really
troubled about some
practices and recently found out that they are the same as Wells Fargo. ASC is currently my mortgage lender but i was
offered a small loan in the month of December from Wells Fargo which I
accepted....and
they never indicated that they are the same as ASC.
I
have been bombarded since then with phone calls from various offices of
Wells Fargo (with
all of my credit and personal info, I might add) offering to re-finance
me with a 15 year
lower interest rate (all financing and fees included i’m sure). They have mailed me information and are
constantly
calling. They asked me who I was currently
with and I told them ASC. They never
indicated
that they were the same. When I filed my
taxes, the tax preparer found that ASC and Wells Fargo had the same ID
or tax number
(meaning they are the same company?). I
just
spoke with the representative in the office of Wells Fargo and he said
that he doesn't
know who ASC is and they have no affiliation and not the same. He said that they are a publicly traded (what
does
that mean) company and have no affiliation with Wells
Fargo.....needless to say, at this
point i don't believe him.
When I went to
the web site i typed
in subsidiaries of ASC and guess what came up.....yep, Wells Fargo.
This is unfair and deceptive practices.
We agree... Another
Wells
Fargo complaint received last week:
Date: 2/24/2005
5:39:57 PM Eastern
Standard Time
From: [ ]
To: WellsWatch
[at]
innercitypress.org
I
am an Anglo massage therapist in Napa, CA...an area with a large
Hispanic population. Our chiropractic
office has two Anglo employees and
three Hispanic employees. Yesterday, Dr.
Brackett sent out Lupe, the Hispanic receptionist to cash a check at
Wells Fargo for petty
cash. Because she didn't have a bank
account
there, they charged Lupe $5 to cash the check and required two IDs, and
a thumb print. When I have gone there to
cash personal checks for
my mother along with a business check for my pay, they have required $5
from me... but no
extra ID and no thumb print. My mother's personal
check for a much greater amount is never any problem.
So, this was my
theory...Wells Fargo
charges $5 to cash business checks here in Napa because they can get
away with it. Of course I wasn't going pay
$5 to cash my check so
I just took it to my mother and she cashed it for me.
But a migrant worker doesn't have the resources I do. So, the next day, Tara Booth, the Anglo office
manager went in to cash another check to test my theory that Lupe
Valasquez was
discriminated against...and they not only didn't charge her the $5 but
they didn't require
any extra ID! I know it is tiny compared to lending practices
discrimination...but it
really makes us mad!
Us too (or,
grammatical but stilted, “we as well”). And yet another:
Subj: Wells Fargo
nightmare
Date: 2/24/2005 5:51:40
PM Eastern Standard
Time
From: [ ]
To: WellsWatch [at]
innercitypress.org
Below is my letter to
Wells Fargo, I have
had no resolution. I ended up signing at a
9.9% interest rate (I was leaving 5.5% on my construction loan) for no
reason. My credit score is 636 when I view
it—they
claim it is 580 but won’t show it to me. I
had no choice but to close as they kept me waiting until I was in a
bind. They then made me sign two papers,
both of which I
was told if I did not sign, I could not get the loan...
Please publish my story as it is a nightmare!
MY LETTER – No response
yet
Wells Fargo Financial
Des Moines, IA 50309
To:
Thomas
Shippee, Alan Blenner, David Kvamme, Michael McCoy & Dennis Young
I am writing this letter
out of total
frustration so that you can see what is going on with your company at
the local level.
I am a real estate agent
in Mississippi. I have recently built a
home and wanted to get
permanent financing and pull my down payment back out.
(I put down $33,000 on the home). I
have several connections in Mortgage brokerage but I had recently heard
that Wells Fargo
was doing home mortgages in the prime market so I called the Jackson,
Mississippi office,
located on county line road. I was asked
to
come in. My husband and I went into the
office
and gave our information and had our credit checked.
We
were told that we could get a home mortgage for 6.5 %.
This was one percent lower than the rate I currently had
and I was told that
because of my credit, I could never get the 5.5% again.
They said that they only use Trans Union and my score
with them was 580. My score has never been
580 with anyone. I told them that I
checked with all three agencies
and my lowest score was 625. They said
that
they figured it differently than I did. Is
a
FICO score not the way to figure it? I didn’t understand this but I
told them that I
would take the higher rate if I could pull out at least $20,000 ( My
loan with the bank
was for $206,000.) I was then told that if
my
home appraised for $250,000 or above, I could pull this money out and
refinance the house
at 6.5% on a three year ARM. I told them
okay
and waited. Two weeks later, after
accumulating all of the paperwork, the appraisal came back at $265,000. I was then told that it did not appraise high
enough for me to pull the cash out. I was
told
that they could refinance it but not pull the money out.
Why, I asked would I refinance at one percent higher
rate and not pull money
out? I then inquired about a home equity
loan
or any type program where I could keep my original mortgage and just
borrow against the
equity. I was told “they didn’t do
that anymore” and I would have to refinance the entire home. They offered me a rate of 7.25%.
Ben (the Manager) told me that I should take the
7.25% and pull out 95% of the equity, pay down my debt which was the
only reason for my
low score. Then, he stated, my credit
score
would go up and he would refigure the loan based on the new credit
score. This entire time, I had pulled my
credit online and
showed 628. Ben keeps insisting that their
records showed my score at 580. I could
not
understand why he showed such a lower score. I
asked him to run the credit again. This is
a
total of two times I authorized for my credit to be checked.
After checking my credit, he said that it still showed
580 and that if I
took the 7.25 % I could get up to 95% of the equity, pay down my debt
and come in within
45 days and receive the new interest rate of 6.5. I
asked for this in writing and was told that “I had his word and it was
their policy
not to put things in writing.” With time
being lost (wasted) I told him to go ahead with the loan at 7.25% and
then asked what the
payment would be. His payment was very
much
higher than what I figured it should be which he explained by the APR.
Even though the
rate was 7.25, it seems the payment was figured on 7.9.
Okay, I said, even though I have never heard of this I
gave him the go ahead
to submit the loan. I was told we should
get
approval that day. That was on a Friday. The following Friday, after many phone calls
and
many reassurances that everything was fine, I was called and told to
come in and close,
the loan was ready.
My husband and I made
the one hour trip
down to the loan office and sat down with a girl we have never met to
close the loan. It turns out, the
paperwork was done at 7.9% with
$19,000 cash back and no other bills paid. I
told her that this was not the loan we had agreed to and she stated
that they would not do
the loan we agreed to. I asked for Ben and
was
told he was headed out of town for the weekend. I
then asked for a number of someone higher that I could call.
I walked outside to make the call but since it was after
5:00, no one
answered. I then went in and told the girl
that because they kept me waiting for over a month, I was now in a bind
to get the loan
and would sign the papers because I had to have the money but I was
going to go to an
attorney afterwards. I was told that I
couldn’t get the money for three days anyway. I
had never heard this before and in over 100 loan closings that I had
been to, I have never
seen a customer wait three days until getting the money.
I told her that I would sign and she then informed me
that the loan had been
cancelled. I said “how can you cancel the
loan in 5 minutes.” She said she had. I asked for a copy of the paperwork and was
told
she had just shredded it. I then demanded
that
they get in touch with Ben. I waited
around a
half hour for Ben to return my call. He
stated
that they would not go over 85% at the interest rate of 7.9% and he was
sorry he
didn’t inform me of that earlier. He
stated that I could go 90% with an interest rate of 8.9% (which is
incredibility high to
me when there is nothing on my credit that I see that should keep me
from getting a decent
loan). He said that they could do the 8.9%
and
then pay down the debt and I could come in and redo the loan within 45
days at no cost and
my rate would be 7.9%. Everything is now
over
a point higher than I agreed to. It seems, every week that I wait, the
percentage goes up
another point. Now, I am in a bind, I have
been lied to and played with for over a month. I
have no choice but to take what he is offering but I want you to know
that not only will I
never refer anyone to you for a mortgage, I plan to take an ad out in
the Clarion Ledger
about this and also to post a letter on the Realtor Multiple listing
web site in Jackson. I also plan to go to
the attorney General regarding
all the lies I was told. AND to top it all
off, I check my credit again last night to try and justify the 580 you
keep claiming to
show. I got 627; it went down a point
because
you apparently have checked my credit 4 times in the last month, two of
which were without
my consent. To say that this has been
disappointing is an understatement, it has been a nightmare.
I will not let this die. To
top
it all off, he still will not give me something in writing that states
the rate will go
down later and he has made me wait so long that it’s to late to start
over with
another company. Is this the way you do
business?
Yes, that is how Wells does business..
Update of February 21, 2005: A suspicious lack of candor:
last week ICP received complaints about America's
Servicing Company, including a request to know who owns it.
ICP went online
Update of February 14, 2005: A
Phoenix woman sued Wells Fargo & Co. in
federal court on Feb. 9, alleging her former employer failed to pay
overtime. The lawsuit
seeks class-action status to represent thousands of current and former
so-called
``business systems'' employees who produce automated versions of paper
forms and perform
other automation jobs. The suit was brought by Jasmin Gerlach, who
worked in the bank's
Phoenix office from 1995 to 2004. She claims she is entitled to being
paid for past
overtime work because she and others were wrongly classified as being
exempt from overtime
pay...
Update
of January 31, 2005: Tales of
Wells
Fargo Financial’s non-mortgage predation, from PhillyNews last week: on
Nov. 28,
2003, Ms. Ying Zhang bought two bedroom sets and a table for $4,800 at
Raymour &
Flanigan in Wilmington, Delaware. The lender was Wells Fargo Financial.
Zhang “made
monthly payments, as required, and a final payment on Nov. 24. But when
Zhang looked back
at the paperwork, something didn't add up: Her final payment had
included nearly $900 in
accumulated interest.... Zhang first called Wells Fargo Financial,
which provided the
financing for Zhang and other customers at the privately held furniture
retailer. A Wells
Fargo rep referred Zhang to the contract she signed, which indeed did
say, "The no
interest option ends on 11/07/2004." When Zhang protested that the
offer was for a
year, not 11 months. [After PhillyNews’ inquiries,] Raymour &
Flanigan spokesman
Heather Ward called back to say that Wells Fargo would be sending Zhang
a full refund of
the interest she paid... Ward referred questions about financing to
Wells Fargo. Bank
spokesman Steve Carlson said the interest-free due date is disclosed on
sales slips and
monthly statements. Why does a ‘one year’ offer ever come due less than
a year
later? Carlson couldn't say, but told me: ‘If we have erred, we do what
is right for
the customer.’” Yeah -- if they have
a major metropolitan daily newspaper on their side. If not?
Well, that’s where Wells Fargo Financial’s profits
come from...
Update
of January 24, 2005: Wells on the prowl -- in an interview
earlier this month,
CEO Dick Kovacevich said his competitors “are running out of gas, and
either they
merge with someone to get restarted or they sell to someone... We're
seeing more
opportunities to do deals at closer to financially attractive levels
than before."
Update of January 18, 2005: Wells Fargo announced on January 10 its stake in Charlotte NC-based Viewpointe LLC, which archives more than 25 billion electronic check images a year. Given Wells Fargo's record in leaking (or having stolen) customers' private information, it’s questionable how good a fit this is...
Update of January 10, 2005: Rumors of a merger were swirling over the
weekend:
Wells Fargo eying Barclays (which is more publicly making moves on
South Africa’s
Absa Group Ltd). Well at least now the
predatory lending is uniformly branded: on January 4 “Wells Fargo
announced that its
“Trans Canada Credit Corp. subsidiary has changed its name to Wells
Fargo Financial
Corporation Canada. Wells Fargo Financial, the consumer finance
subsidiary of the
financial services giant, acquired Trans Canada in November 1992 and
operated it under
that name until Jan. 1.” From Wells Fargo’s own press release: “One
element
of the name change project is creation of a new French logo and
corporation name, Societe financiere Wells Fargo
Canada, to be used
in Quebec. It represents the first time a Wells Fargo entity has
conducted business under
a French name.” At least one
that can be printed in a family
newspaper...
Update of December 20, 2004:
Little shifts in Wells
Fargo’s subprime auto lending business: last week, Wells
Fargo Financial announced it will sell its
Florida-based Consumer Auto Receivables auto loan unit to
fellow-subprimer CompuCredit
(which is also now a payday lender, with the f/k/a First American Cash
Advance, and side
deals with Synovus). To be sure, Wells is still in subprime auto:
“Officials said
Wells Fargo Financial will remain one of the premier non-prime
automobile lenders in North
America through its Philadelphia-based Wells Fargo Financial Acceptance
business unit.
That unit, which has about 580,000 customers, has more than $8 billion
in
receivables.”
Update of December 6, 2004: ICP
has timely challenged Wells Fargo’s Texas application.
Last week, ICP received a partial copy of Wells Fargo’s November 29,
2004, submission
(the “Letter”). The
Letter at page 34 states that “Confidential Exhibit 9
(Question 6) contains a list of businesses with which Wells Fargo
maintains a business
relationship whose business operations may constitute subprime lending.
This exhibit
includes the [NAICS] code for these businesses, and the Wells Fargo
lending group
providing lending or services to each business.”
This is an outrageous withholding, given that ICP and
now Bloomberg News
(see below) have identified many of the fringe financiers which Wells
Fargo funds or
otherwise enables. Additionally, the
above quoted
does NOT fully respond to FRB Question 6, which asks not only about
subprime lenders, but
also “providers of non-traditional financial services (such as check
cashers, pawn
shops, or rent-to-own businesses).” An
additional response must be demanded and released, ICP has commented to
the Fed...
Update of November 29, 2004: Hitting a new low, in last week’s Bloomberg News article about the funding of payday loans and lenders, Wells Fargo spokeswoman Susan Stanley-Jones spun: “Free and equal access to credit for any legitimate business that complies with all laws is a cornerstone of the free enterprise system.” This was in response to the showing, from ICP to Bloomberg and then on the wire, that Wells ” has extended credit to Payday Inc. in Albuquerque, New Mexico; Payday Plus Inc. in North Dakota; and Payday Express Inc. in Omaha, Nebraska, among others, according to UCC filings.” Bloomberg -- unlike, we’re hoping, another major publication -- missed the Wells - Armed Forces Loans, Inc. connection. The big picture: Wells Fargo enables predatory lending, and is itself a predator...
Update of November 22, 2004: From the mail bag:
Subj: Wells Fargo complaint to add to website list
Date: 11/20/2004 9:17:28 AM Eastern Standard Time
From: [Name withheld at request]
To: WellsWatch [at] innercitypress.org
I, too, have been
mislead by individuals at Wells Fargo. I
had
an increase in property taxes and had to seek other means of being able
to afford my
mortgage payment. I received a call from
Wells
Fargo within the same week of receiving an annual escrow statement from
my previous
banking institution. The coincidence was
uncanny. I explained to her the reason I
had
to refinance was because the property taxes had been increased without
my knowledge and I
wanted to be able to have affordable payments. I
was told that they would definitely be able to get us a reasonable rate
with a lower
monthly payment. We proceeded with the
loan. The fact that sealed the deal was
that we were
informed that we could borrow the amount owed to our previous lender
and in addition to
this amount, we were told we could borrow enough money to cover fall of
this year's
property taxes and spring of next year as well. During
the processing of the closing, communication began to break down, we
were given different
facts about the entire process left and right. The
agent finally said that the loan had to be changed from a 30 yr. loan
to a 15 yr. loan to
get the amount of money that we wanted in order for the amount to be
approved. The rate appeared to be
reasonable based on the
monthly payment, so we consented still under the impression that the
property taxes owed
had been figured into the closing amount. We
recently received a letter from our previous lender stating that we had
an overpayment. Through investigation we
discovered that property
taxes had not been paid and figured into our refinanced loan amount. When we called Wells Fargo to investigate this
matter someone took our information and said they would get back to us. At this point, they knew we were very
frustrated
and misinformed by someone. We did not
receive
any phone call and in fact we had to track the agent down.
She ignored our calls. When
we
spoke to her, she gave us the impression that this is the first she had
heard about the
situation and had to be informed all over again. Obviously,
she did not care about our concerns or she would have called us and
made it a priority to
get back with us. She then informed us
that
based on our appraisal the amount which we had requested was denied
because we didn't have
enough equity. This is totally false
because
our home appraised for $5,000 more than the loan amount we were asking
for. And at the time of closing, we were
encouraged to
borrow more money from them to consolidate other bills!
Credit is not an issue here---because both my
fiancé and I have
excellent credit and we wish to keep it that way. Had
we been informed that our Fall 04/Spring 05 taxes could not be factored
into our loan
amount we would have stayed with the previous lender.
As it is now, we are having to come up with over $200
more a month to cover
bills compared to what our financial situation would have been had we
just stayed with the
previous lender. The agent knew our
concerns,
knew our goals and she was only wanting to seal the deal.
I am appalled by the incompetence of this agent and the
blatant disregard
that she had for our concerns and our financial well being.
I feel that she purposefully withheld information from
us in order to seal
the deal. This was unethical.
Had when been informed of the real facts we could
have concluded that going with Wells Fargo was not in our best interest
and we would not
have proceeded with the loan. Now we are
locked in with Wells Fargo for three years because if we withdraw from
them and refinance
with someone else within that timeframe, they can charge us $7,000. Please, I beg you to actively pursue your
quest in
holding Wells Fargo accountable for their actions.
They
are simply wolves in sheep's clothing!!!!! Sincerely, A Betrayed
Customer
Update of November 15, 2004: Wells Fargo’s general counsel James Strother,
with an opportunity to address Wells Fargo’s documented relationship
with payday
lenders including Armed Forces Loans, Inc., which directs its high-cost
loans at active
duty military personnel, has in a November 11 letter provided only
boiler plate.
“Wells Fargo and its affiliates have, on a transaction-by-transaction
basis, acted as
a lender or provider of credit facilities to unaffiliated entities
engaged in consumer
finance businesses which may including acting as a payday lender...
Loan proceeds may or
may not involve funding the actual lending operations of such
entities...”. Targeting high-cost payday
loans at soldiers? ICP has replied....
Update of November 8, 2004: While waiting for Wells Fargo’s response, in
came Citigroup’s November 4 response to Inner City Press/Fair Finance
Watch’s
submission to the Federal Reserve and Office of the Comptroller of the
Currency of Uniform
Commercial Code filings by Citigroup and its proposed acquisition,
First American Bank:
“ICP attaches certain
records of [UCC]
filings related to several Citigroup and FAB clients... As a practice,
Citigroup and its
bank subsidiaries do no engage in the business of funding check cashing
or payday lending
businesses. Citigroup’s account opening procedures and credit policies
generally
prohibit the opening of new accounts for businesses identified as check
cashing
operations. Citigroup does have a single active relationship with an
armored car company
that also includes a checking account to an affiliate in the check
cashing business. This
account predates the Citigroup procedures for check cashers, and
Citigroup has been in the
process of winding down the relationship pursuant to a gradual exit
strategy.
“In addition, on
occasion check
cashing businesses have become customers in connection with Citigroup’s
acquisition
of other financial institutions. In such cases, Citigroup undertakes a
post-acquisition
review of these relationships and takes action to close or limit them,
when appropriate.
Citigroup makes changes to conform with its business practices as
expeditiously as
commercially reasonable, yet in a manner that does not unduly disrupt
the operations of an
existing client...”
While contesting some of the above, ICP has now submitted a
second timely comment
on Wells Fargo. ICP in its first comment put into the record the
commitment by another of
Wells Fargo’s peers, SunTrust, to no longer fund payday lending or car
title lending
companies. Now, as to Wells Fargo and
check
cashing companies, ICP has submitted some examples:
Arizona: ANYKIND CHECK CASHING CENTERS, INC.; 1 STOP CHECK CASHING $ PAYDAY & TITLE LOANS, LLC.
Florida: THE CHECK CASHING AND MONEY CENTER, INC.
Iowa: MIDWEST CHECK CASHING OF SIOUX CITY, L.C..
Minnesota: ACTION CHECK CASHING INC.
Nebraska: CASH CONNECTION CHECK CASHING, L.L.C..
New Jersey: DAK'S CHECK CASHING; NATIONAL CHECK CASHING INC..
New York: AVENUE CHECK
CASHING CORP ; A V W CHECK CASHING CORP / BAY STREET CHECKING; FORTUNE
CHECK CASHING;
GRANITE CHECK CASHING SERVICE, INC.; HAR JOE CHECK CASHING CORP; HUNTS
POINT CHECK
CASHING; JAMAICA LEFFERTS CHECK CASHING; PENN STARRETT CHECK CASHING; PENINSULA CHECK
CASHING; PRIMA CHECK CASHING; QUALITY CHECK CASHING; RIDGE CHECK
CASHING CORP; RELIABLE
CHECK CASHING CORP; RELIABLE CHECK CASHING CORP; RICHMOND HILL II CHECK
CASHING; SAMARA'S
CHECK CASHING CORP; SUBWAY CHECK CASHING; SUNRISE CHECK CASHING;
TRIBORO CHECK CASHING;
WILMAR CHECK CASHING CORPORATION; WINK CHECK CASHING CORP...
We’ll see...For or with more information, contact us
November 1, 2004: Inner City Press / Fair Finance Watch has just filed timely comments opposing Wells Fargo's proposed acquisitions:
November 1, 2004
Board of Governors of the Federal Reserve System
Attn: Chairman Alan Greenspan, Governors, Secretary Johnson
20th Street and Constitution Avenue, N.W.
Washington, DC 20551
Re: Timely comment
opposing and requesting public hearings on Wells Fargo’s proposal to
acquire First
Community Capital Corporation and its affiliates
Dear Chairman Greenspan, Governors, Secretary
Johnson, FRB:
On behalf of Inner City Press/Community on the Move and its
members and affiliates,
including the Fair Finance Watch (collectively, “ICP”), this is a
timely comment
opposing, requesting public hearings on the applications by Wells Fargo
& Co. (along
with its affiliates, “Wells”) to acquire First Community Capital
Corporation,
First Community Capital Corporation of Delaware, Inc., First Community
Bank, N.A., First
Community Bank San Antonio, N.A (along with their affiliates, “First
Community”
or “FC”).
ICP is opposed to Wells Fargo’s proposed acquisitions of under
the Community
Reinvestment Act, based on systemic lending disparities, including the
targeting of
protected classes with higher cost credit through Wells Fargo
Financial, and,
particularly, Wells Fargo’s enabling of high-cost payday lenders, car
title lenders,
rent-to-own and pawn shops and other predatory fringe financiers. Perhaps
the worst, and the one on which ICP demands immediate
action by the FRB (including because ICP provided documentary evidence
of this outrage to
both senior FRB staff and the chairman in July 2004) is Wells Fargo's
funding of a payday
lender whose focus is active duty military service-members: Armed
Forces Loans, Inc., of
3824 South Jones, Las Vegas, Nevada. Beyond
Armed Forces Loans, Inc., here’s another sample dirty dozen financed by
Wells Fargo:
TITLE
LOANS EXPRESS, INC. of 4295 SAN
FELIPE, HOUSTON, TEXAS 77027, financed by WELLS FARGO BANK TEXAS,
NATIONAL ASSOCIATION
HOUSTON AREA PAWN SYSTEMS, INC., financed
by WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION
EZ
PAWN HOLDINGS, INC., of 1901
CAPITAL PARKWAY, AUSTIN, TX 78746 (financed by Wells Fargo Bank, N.A.,
as recently as
April 13, 2004, according to Uniform Commercial Code filings);
PAYDAY
LOAN MANAGEMENT, INC. of 1901
CAPITAL PARKWAY, AUSTIN, TX 78746, financed by WELLS FARGO BANK TEXAS,
NATIONAL
ASSOCIATION
EXPRESS TITLE & PAYDAY LOANS, INC. of 1131 WARREN LANE, VERNON
HILLS, ILLINOIS 60061,
financed by WELLS FARGO BANK, N.A., according to an Illinois
Uniform Commercial Code
filing
ADVANCE AMERICA CASH ADVANCE CENTERS, headquartered as 135 NORTH CHURCH
STREET,
SPARTANBURG, SC 29306, multiply financed by Wells Fargo, including in
2004;
PAYDAY INC of 5021 INDIAN SCHOOL RD NE, ALBUQUERQUE, NM 87110
PAYDAY PLUS of 425 HILL AVENUE, GRAFTON, ND 58237, financed by WELLS
FARGO BANK NORTH
DAKOTA, NATIONAL ASSOC
AUTO PAWN, INC. of 7534 HICKMAN RD, DES MOINES, IA 50322, financed by
WELLS FARGO BANK
IOWA, N.A., according to Iowa UCC records;
PAYDAY LOANS III, L.L.C. in Idado, financed by WELLS FARGO BANK, N.A.
PAYDAY EXPRESS, of 4302 SOUTH 24TH STREET, OMAHA, NE 68107, financed by
WELLS FARGO BANK
NEBRASKA, NATIONAL ASSOCIATION
1 STOP CHECK CASHING $ PAYDAY & TITLE LOANS, LLC of 10555 E
FIRESTONE BLVD, NORWALK,
CA 90650, financed by WELLS FARGO BANK, NATIONAL ASSOCIATION, according
to a May 6, 2004,
Arizona UCC filing
MAC DIANE'S PAWN CENTER in Michigan;
and,
again, ARMED FORCES LOANS INC. of
3824 S JONES STE G, LAS VEGAS, NV 89103, regarding which, see "Lending
Scams Target
Military," at http://usmilitary.about.com/cs/generalpay/a/loanscam.htm
Wells Fargo targets
its higher-cost loans,
through Wells Fargo Financial, at protected classes.
Using
Texas as an example, in 2003 in the Houston MSA, Wells Fargo Bank NA
(CA) denied African
Americans' refinance loan applications 2.34 times more frequently than
whites, and denied
Latinos’ applications 2.20 times more frequently than whites.
Significantly, Wells
Fargo Bank made 2716 refinance loans to whites, and only 161 to African
Americans -- 16.9 loans to whites for each
loan to an African
American, for Wells Fargo’s prime-rate lender. Meanwhile
in this MSA, Wells’ subprime lender Wells Fargo Financial Texas, Inc.
made only 1.33
loans to whites for each loan to an African American. In the Houston
MSA, Wells Fargo
targets its high-cost loans 12.7 times more frequently at African
Americans than whites
(henceforth, the "targeting index").
In the Dallas MSA in
2003, Wells Fargo Bank
NA (CA) made 1429 refinance loans to whites, and only 53 to African
Americans -- 27 loans
to whites for each loan to an African American, for Wells Fargo's
prime-rate lender. Meanwhile in this MSA,
Wells' subprime lender Wells
Fargo Financial Texas, Inc. made 108 higher-cost refinance loans to
African Americans, and
252 to whites -- 2.3 loans to whites for each loan to an African
American household. Wells
Fargo targets its high-cost loans in Dallas 11.7 times more frequently
at African
Americans than whites.
Wells Fargo’s
targeting index,
similarly calculated, is 6.81 in Austin, Texas; 3.42 in El Paso, and a
whopping 17.2 in
San Antonio. Wells Fargo also funds and
enables payday and car title lenders and pawnshops in Texas. Wells
Fargo’s
applications to expand, particularly but not only in Texas, should be
denied.
Wells Fargo's
targeting of protected classes
with higher-cost subprime loans from Wells Fargo Financial is
nationwide. In the Los Angeles MSA in
2003, Wells Fargo Bank NA
(CA) made 1116 refinance loans to whites, and only 121 to African
Americans -- 9.2 loans
to whites for each loan to an African American, for Wells Fargo's
prime-rate lender. Meanwhile in this MSA,
Wells' subprime lender,
Wells Fargo Financial California, made 95 higher-cost refinance loans
to African
Americans, and 161 to whites -- 1.7 loans to whites for each loan to an
African American
household. Wells Fargo targets its high-cost loans in Los Angeles 5.41
times more
frequently at African Americans than whites. Finally,
for now, in its headquarters MSA of San Francisco, Wells Fargo targets
its high-cost loans
in Los Angeles five times more frequently at African Americans than
whites.
It is time for the FRB
to inquire closely
into disparities and discrepancies in Wells Fargo’s subprime lending
including beyond
the continental United States. As simply one example, Wells Fargo has
stated
"Island Finance does
not have a
specialized customer service department or a toll-free telephone number
for complaints.
Customers who have complaints contact the store handling their account.
If the store is
unable to resolve the complaint the complaint if referred to the
district manager. If the
district manager is unable to resolve the complaint it is referred [to]
the district
manager's supervisor."[FN]
That Puerto Rico-based Island Finance has even less consumer
protection safeguards
that Wells Fargo Financial's overall operations is significant -- and,
ICP contends, is
violative of the Fair Housing Act and Equal Credit Opportunity Act,
given the demographics
of Island Finance's headquarters and its lending operations.
Here are some sample
consumer abuse by Wells
Fargo in the U.S., based on messages directed to ICP:
Subj: Wells Fargo
Problem
Date: 10/5/2004
6:08:30 PM Eastern
Standard Time
From: [Name
withheld]
To: WellsWatch
[at]
innercitypress.org
I found your web
site most
interesting as I am currently in a struggle with the Wells Fargo Home
Mortgage Dept. Last
year my insurance company dropped to a grade C and was informed I
needed to change to a
different carrier with a better standing. In
April of 2003 I did just that. As of April
11,
2003 I changed to a higher grade insurance with the same agent all
while never changing my
policy number.
In May of 2003,
the following month,
I refinanced with Wells Fargo. Being that
my
loan already belonged to Wells Fargo I assumed the process would be
quick and payless.
One of the
requirements when
refinancing your home is to verify insurance and it was at that time
that I handed over
all my new insurance information to the loan officer at my local Wells
Fargo Bank. My insurance was verified, the
information was
processed and I closed on the house soon after.
In August of
2004, I received a
letter from Wells Fargo stating that my mortgage payment was increasing
by the ridiculous
amount of $600.00. Being that I live in a
rapidly growing city I assumed it had to be taxes etc...
I had no choice but to pay my September mortgage
statement $600.00 higher
than the past 12 months. My wife and I
discussed selling that house and moving into an apartment.
How were we going to afford this?
I decided to let
one of my
colleagues review the statement and he immediately noticed that my
insurance premium was
listed at $3,500.00. He asked how big my
house
was and why was I paying that extremely high premium of $3,500. After a little digging, I found that my
insurance
premium should have been listed at $895.00 not $3,500.00.
We are talking about a 400% difference here.
I immediately
called my insurance
carrier and was amazed to find out that my insurance had been cancelled
in April 11, 2004
due to non-payment. Non-payment!. I escrow my insurance payment and
Wells Fargo had
$1,000.00 plus in my escrow for my insurance payment.
What happened? Why was it
not
paid?
After many, many
calls to Wells
Fargo I was able get a handle of the situation. It
turns out that the new insurance information was processed but my
insurance carrier they
was never informed of the changes to the loan number (due to refinance). My insurance company sent a notice to Wells
Fargo
in Feb 2004 stating that my payment was coming due in April.
They sent one in April then they sent one in May
notifying them of
cancellation. Since my insurance carrier was not notified of the change
in loan number
Wells Fargo did not act on the payment request and did not pay. According to Wells Fargo, I allowed my
insurance to
expire. That came directly from their
mouth, I
let my insurance expire. A letter
notifying me
of this was not even sent until 1 month after my policy had been
cancelled. For the record, I did not
receive this letter or
the other 2 that they say was mailed. You
would think that something this serious in nature would require a
simple phone call or
maybe a certified letter asking me to contact them immediately. When asked why they did not call me they
stated it
was not their policy to do so. So what do
they
do instead? You guessed it, they put me
into
their own insurance carrier at a rate 400% higher than the one I had
selected. 400% higher.
What's worse is
that they have never
once apologized to me or my wife. Instead, they are committed to
telling me that it was my
fault and I should have responded to my letters. Meanwhile
my October payment is coming due and I told them I would not pay that
ridiculous amount
again. They said it would take 3 to 6
weeks to
resolve this and recommended I make the payment. The hell I am, I said. If you can't help me get me to someone who
can.
Soon after I was transferred over to a diff. department who would only
differ the
$2,500.00 negative balance over 2 years bringing my payment back to
earth and putting a
band aid on the situation.
I failed to
mention that I obviously
had to get a new insurance policy at a slightly higher rate than last
year. Wells Fargo paid the policy but then
charged
1,000.00 back to my escrow account. For
those
of you keeping score that puts me back to a negative 3,500.00 If not for my initial insurance escrow of
1,000.00
I could be at negative 4,500 by now. Wells
Fargo managed to get a 1/3 of the 3,500.00 back from the carrier but
still have to
consider if they should credit me the remaining balance or not.
I now have to
wait 3 to 6 weeks
before a supervisor makes a decision on the remaining balance currently
negative on my
escrow account. When asked why it took so
long
the answer I got was, "they are reviewing lots of other similar cases". I asked, does this happen a lot and she
responded,
"all the time". Amazing!
Subj: Our Wells
Fargo story-names
deleted
Date: 10/19/2004
10:34:18 PM Eastern
Standard Time
From: [Name
Withheld]
To: WellsWatch
[at]
innercitypress.org
I am a Real
Estate and Mortgage
Broker working with a property owner of a property in Aurora, CO
80011-- the Seller had to
move back home to Australia because of cancer and its treatment. She needed to be near her family.
The property owner's ex-husband was given Power of
Attorney to sell the property for her. Unfortunately
he was involved in a serious automobile accident that incapacitated him
for a number of
months and the property went into foreclosure.
When the
ex-husband recovered sufficiently he contacted me to help him sell the property. In June 2004 we
found a Buyer-- had a contract and even an approved loan.
All of the paperwork was submitted multiple times to the
Wells Fargo
foreclosure department. We made many calls
to
them for updates on status of the offer. After
two months we had heard nothing and the Buyer walked from the deal-- no
longer willing to
cope with the aggravation.
In mid- August
the ex-husband and I
found another Buyer-- and put together another deal-- including a fully
approved loan--
the offer price is actually more than Wells Fargo's later VPO showed
the property is
worth. This time we have actually talked a
couple times with representatives of Wells Fargo's foreclosure
department who assure us
that our Offer is a great offer and should be approved any minute. NOW-- 6-8 weeks after our initial submission--
and
four Amend Extends later-- we are still waiting for an approval-- or
even a disapproval. Our Wells Fargo
contact assures us it looks like a
good deal-- and fits within the number parameters they look for-- and
it just sat for FOUR
DAYS on his supervisor's desk while he went on vacation--and had not
even been touched
when he returned. (This is not the first
time
we have gone through a similar scenario-- only to have the file given
to a new employee
who starts the process all over!)
Our latest
amend-extend runs out in
two days. The Buyer is reluctant to
re-extend
the contract-- cos he doesn't think Wells Fargo will ever get the file
cleared and
approved. I am tending to agree with him.
I
think the Wells Fargo Foreclosure department is the most inept system
and the most
apathetic, incompetent bunch of people I have ever run into...
Eventually WF will pay the
price-- the Bank, the organization. I
think
all the news revealing not only corruption, but also ineptness and
inefficiency, within
the corporate culture is pointing the finger to a truth that says that
eventually the
organization pays for all the crap it has been shoving down its
customers-- and other's--
throats. Attitudes that say the little guy
doesn't count just can't prosper anyone in the long run.
Subj:
Out of Control
Date: 10/8/03
4:14:37 AM Eastern
Daylight Time
From: [Name
Withheld]
To: WellsWatch
[at]
innercitypress.org
I am extremely
impressed with your
understanding and explanation of what is going on with the banks and
the regulatory
institutions in this country. Hopefully
your
editorials reach enough people who care whom will stand up and fight
against these
fraudsters. Unfortunately, the white
collar
crime is roaring ahead at the speed of the internet as banks like Wells
Fargo Bank, NA
(securities vehicle) parade around disguised as a real bank with
insurance for your
accounts.
I am at the
beginning of an
arbitration suit with Wells Fargo Bank, NA here in Nevada.
The case stems back to February 1997 originally created
by a loan officer @
145 West Portal Branch for Wells Fargo Bank. The
bank officer added a third page to a completed two page application for
a $100,000.00
business line of credit for overdraft and cash flow need for my
construction company. She added a third
page to the application which the
bank tells me created a MasterCard account that had an additional
$100,000.00 line
attached to it. When I increased my line
to
$200,000.00 in December 1997, ten months later, the MasterCard was not
closed out. On March 9, 1998, a $97,000.00
debit posts to my
credit line, deposits in to my business checking account, and debits
the checking account
the same day referencing "Bank Originated Entry".
The saga continues unabated and has grown horns over the
last five years. I believe that a majority
of the problems may stem
from my citizenship papers. I was born in
St.
Johns, Newfoundland on Peppermill Air Force Base to American parents. My father has a FS-240 (Report of Birth for
Children Born Abroad to American Parents) form filled out by the Consul
in Newfoundland. The only problem is, the
Birth of Child Certificate
Number on the FS-240 doesn't reference my Birth Certificate but another
Report of Birth
which I can only assume is another child. On
June 1, 1966, I am issued Naturalization/Citizenship papers at Luke Air
Force Base in
Arizona where my father is stationed at the time. These
papers certify that I am a Citizen of the United States but what about
the child referred
to in the FS-240. Another interesting note
is
at the bottom of the FS-240 it states:
Service No. 736
Tariff 13a
This is clearly
some type of trading
reference which is created by the Consul Huston Dixon in April 1958. 45 years later coupled with the speed of
the
internet, this vehicle appears to have become a major trade vehicle
between Canada and the
US which passes through undetected through a Federal Reserve Account
held in a Custodial
Trust Account for a Minor I have
been
researching fraud on my accounts with Wells Fargo with little of no
cooperation from the
Bank. I also was unable to get my
attorney's
to file a motion against the bank. I
finally
released my counsel and filed a ten million arbitration suit against
the bank on my own. Hopefully the truth
will matter and I will be
reimbursed for all of the fraudulent transactions on my accounts over
the years.
Do you know whom
American Securities
Company of Nevada is? They are trustees in
the
State of Nevada for Wells Fargo Bank, NA and Wells Fargo Home Mortgage
Inc. The are right in the middle of all
the non-judicial
foreclosures as they help facilitate the exchange of Deeds of Trust
registering them with
MERS. What a mess. I
am not sure if no one really cares or is it too
complicated for the public to understand. The
white collar criminals have really cooked up a dozy with this pyramid
scheme. Arbitrating with themselves as
Wells Fargo now owns
and insurance company that pays the claims which are passed down
through the stock price
of the bank securities offerings all the while, paying themselves,
AGAIN.
Anyway, thank you for your time...
More needs to be (and
will be) said --
including about Wells Fargo’s still-entirely-unreformed subprime
lending beyond the
continental United States -- but ICP will await copies of the FRB's
correspondence with
and about Wells Fargo and First Community, and the banks' responses.
Specifically, based
on prior FRS precedents, at a minimum the following question(s) should
be asked, and
publicly answered:
"For any business
relationship (e.g.
commercial lender, warehouse lender, purchaser, custodian, etc.) that
Wells Fargo or First
Community or any of their affiliates have
with
any subprime lenders (including providers of non-traditional banking
products, such as
check cashers, title lenders, pawn shops, or rent-to-own businesses):
(i) identify the
relevant business parties and (ii) describe the nature of the business
relationships...
Additionally, to the extent not otherwise covered in your responses to
the comments of the
Inner City Press Community on the Move & Fair Finance Watch,
describe any due
diligence that Wells Fargo or First Community typically conducts
concerning any such
subprime lender's compliance with applicable fair lending and consumer
protection laws
prior to entering into these business relationships, including... (c )
any monitoring or
other ongoing procedures Wells Fargo or First Community has adopted to
access compliance
with these laws. Provide a copy of such procedures that are used to
determine whether
third party originators are engaged in, or facilitating, abusive and/or
predatory lending
practices." [FN: Also incorporated herein by reference and to be made
part of the
record, for obvious reasons, is the July 12, 2004, submission of
SunTrust Banks, Inc., on
these issues.
The answers to these questions should be made
public, as argued in
the FOIA appeal and complaint filed by ICP in connection with Wachovia
- SouthTrust (the
FRB was served with the complaint on October 25, 2004).
Communications regarding these proceedings, including Wells Fargo’s responses, any and all FRB communications with Wells Fargo, and the improperly withheld portions of the Applications, should be provided to the undersigned.
Respectfully submitted,
Matthew R. Lee, Esq.
Executive Director
Inner City Public Interest Law Center
& Inner City Press/Community on the Move
Tel: 718-716-3540 Fax: 718-716-3161
NOTE: For or with more information, contact us. This will be updated; stay tuned...
Earlier reports:
In late July 2003, ICP filed challenges to the applications by Wells Fargo to acquire Pacific Northwest Bank, and Grand Junction Bank in Colorado. The comments, filed with the Federal Reserve in Washington, D.C. and San Francisco and summarized below, focus not only on Wells' abuse-plagued subprime lending in the continental United States -- including as documented in complaints that consumers have directed to ICP -- but also overseas, in Panama, Aruba, the Netherlands Antilles and the U.S. territories of Guam and Saipan, as well as Puerto Rico (Free Associated State). See, "Group Objects to Wells Deals," by Todd Davenport, American Banker, July 29, 2003, Pg. 17, quoting ICP that "Wells Fargo is a predatory lender, and is exporting these practices beyond the United States." See also, "Group Files to Block Wells Fargo Acquisition," Seattle Post Intelligencer, July 29, 2002; "Wells Fargo Accused of Predatory Lending," Denver Post, July 29, 2003; "Wells Fargo Accused of Unfair Lending," Rocky Mountain News, July 29, 2003. This will be updated at least weekly. Until then, for or with more information, contact us.
Update of September 27, 2004: Sleazy Wells’ sleazy business: in New Jersey,
the Attorney General's Office has launched an investigation into bankrupt phone reseller NorVergence, and its financier: Wells Fargo Financial Leasing. Wells has continued to demand payment from former NorVergence customers who bought the company's "Matrix'' box. Customers typically signed five-year lease agreements for the box for tens of thousands of dollars, even though the box itself was worth far less. Steve Carlson, a spokesman for Wells Fargo Financial Leasing, tried to defend Wells’ position. "The customers made an independent decision to do business with NorVergence and we simply financed the equipment hardware lease transaction," he said. He said his company will comply with any applicable law or court order. And yet still nothing from Wells, on its documented funding of payday lender directed as active duty soldiers...Until next time, for or with more information, contact us.Update
of September 13, 2004: In New
York on September 10, the U.S. Court of
Appeals for the Second Circuit reinstated a portion of the claims in a
class-action
lawsuit against Wells Fargo and its home mortgage units alleging they
improperly marked up
fees for real estate settlement services performed by third parties.
The 2d Circuit
remanded the reinstated claim to U.S. District Court in the Eastern
District of New York,
after finding found that a group of homeowners in New York and
California who used Wells
Fargo settlement services had made sufficient arguments that the home
mortgage units of
Wells Fargo marked up fees for real estate services performed by third
parties for the
claim to proceed. The court found that the statute doesn't establish
price controls for
settlement services nor does it prohibit overcharges... And where does
all this money go?
Large Richard: Wells CEO Kovacevich sold 95,000 company shares last
week through a family
trust, according to an SEC filing. The K-man indirectly sold the shares
last Thursday for
$59.15 to $59.17 each, according to the Form 4 filing from September 7.
After the
transactions, the family trust beneficially held 1.51million Wells
Fargo shares, the
filing said. According to the company's most recent proxy statement,
Kovacevich had 1.61
million Wells Fargo common shares as of Feb. 29 in trusts of which the
CEO is a
co-trustee. Like we said, Large Richard....
Update of September 6, 2004: We'll have more to say, when timely, about Wells Fargo's proposal to acquire Houston-based First Community Capital Corporation -- despite the opportunity, Wells never responded regarding its funding of payday lenders including those targeting the military (see below in this Report).
Update of August 16, 2004: From Forbes magazine’s recent send-up of Kovacevich: he says "his bigger competitors are cowards bound for trouble." Bank of America's purchase of FleetBoston for $48 billion? "Excessive." J.P. Morgan Chase's $57 billion payout for Bank One? "Both are running out of gas. I don't believe in economies of scale. You don't get better by being bigger. You get worse," Kovacevich says. Can’t say we disagree. But, among other things, why is this company funding Armed Forces Loans dot com, which targets high-cost payday loans at active duty soldiers. What, we ask, could be worse than that?
At an entirely different, more grassroots level: in Oklahoma City, WFF-ers are movin’ on: Ashley Nicole Craft, for example, has left her job as a "credit analyst in consumer lending" for Wells Fargo Financial in Oklahoma City and jumped to UMB Bank as a commercial banking officer...
Update of August 9, 2004: A HUD audit of Wells Fargo Home Mortgage found that WFHM improperly submitted 2,325 loans for late endorsement. According to a HUD inspector general report, Wells submitted the FHA loans more than 60 days after closing and the borrowers were delinquent on their payments. The IG is recommending that the HUD secretary require indemnification for any losses on the 2,325 loans. We'll see.
Update of August 2, 2004: From the editorial board of the Orlando Sentinel from their July 30 edition, "SunTrust was Right to End Business with Payday and Car Title Lenders" -- "SunTrust made its decision to cut ties with such lenders after a consumer group filed a complaint with the Federal Reserve opposing the bank's pending merger with National Financial Corp. of Memphis, Tenn. Among other complaints, Inner City Press/Fair Finance Watch said records showed SunTrust had at least 60 customers making payday or car-title loans. Announcing its decision, SunTrust cited the ‘potential reputational risks and consumer harm’ that could come from lending to such companies. How candid, and how refreshing. ICP believes SunTrust's decision could persuade other banks -- especially those seeking government approval for mergers -- to follow suit. Let's hope so." Thanks, Orlando Sentinel. And what does Wells Fargo have to say, of any substance? We’ll report it here. Here also is an editorial in the Memphis Commercial Appeal of July 31:
"National Commerce Financial Corp. and SunTrust Banks recently decided to stop doing business with companies that provide payday or car title loans. The move, while commendable, appears to have been done to win favor with federal regulators who will decide whether to approve a merger between NCF and SunTrust. Whatever the motives, the decision shows why high interest loans that are frequently made to lower income borrowers deserve careful scrutiny....A protest by the Inner City Press/Community on the Move and Fair Finance Watch apparently helped NCF and SunTrust see the light... Those words should be a wake-up call to local companies that want to deal in those types of loans. Unless they're willing to accept more regulation and greater accountability, maybe more major financial institutions will follow the lead of NCF and SunTrust.
And then car title lenders will know what it feels like to struggle to get a loan."
That last sentiment, we like how the Commercial Appeal's editorial board put it. (Click here for the full text of these editorial, and more). Still, what's up with Wells Fargo? Developing...
Update of July 26, 2004: Last week the American Banker newspaper, reporting on SunTrust’s announcement in response to ICP’s presentation of UCC filings similar to those on Wells, correctly reported that ICP is "especially critical of Wells' financing of payday lenders that target military service members... Wells Fargo, according to Uniform Commercial Code filings in Nevada, finances Armed Forces Loans Inc. [That's the connection reported here two weeks ago]. Wells Fargo said that it carefully vets its borrowers. 'We have lending relationships with many financial institutions including consumer finance companies,' a spokeswoman said. "In these relationships we require representations and warranties as well as loan covenants requiring that the company comply with applicable laws and regulations.'" So high cost payday loans to active duty soldiers -- of the type denounced by base commands and even last week in the Senate by deputy undersecretary of defense Charles Abell -- these pass Wells Fargo's "carefully vetting"? Outrageous.
While we await a more meaningful response by Wells Fargo, note this: on April 19, Wells Fargo Home Mortgage admitted that it was investigating the theft of a laptop computer containing consumer information, including the names, addresses, and Social Security numbers of thousands of customers who applied for mortgages. The laptop was taken from a rental car left by two employees, with the keys in the ignition, near Lambert-St. Louis International Airport. It isn't the first public embarrassment for Wells Fargo. Last fall, a banking unit announced the theft of a computer from a Concord, Calif. office, which contained more than 200,000 names, addresses, Social Security numbers, and personal line of credit account numbers.
Update of July 19, 2004: Wells Fargo’s funding of payday lending, including the military-targeting Armed Forces Loans, was raised to the Federal Reserve and its chairman last week, by ICP. When first asked about the Fed’s duty to consider applicant banks’ connections with high-cost lenders, the Chairman says that if the Fed has its druthers, it would stamp out predatory lending... So as a test case, the Chairman being told of Wells Fargo’s funding of Armed Forces Loans, which targets active-duty service-members for high-cost loans. The Chairman nods; his staffer take a print-out of the evidence. Now what? More is detailed in this week’s Inner City Press Fed Watch Report (click here to view.
Update of July 12, 2004: Wells Fargo's enabling of predatory fringe finance is the subject of a new report by Inner City Press / Fair Finance Watch. ICP has identified dozens of payday and car title lenders which are financed by Wells Fargo. Perhaps the worst is Wells’ funding of a payday lender whose focus is soldiers: Armed Forces Loans, Inc., of 3824 South Jones, Las Vegas, Nevada. Here are a sample dirty dozen financed by Wells Fargo:
EXPRESS TITLE & PAYDAY LOANS, INC. of 1131 WARREN LANE, VERNON HILLS, ILLINOIS 60061, financed by WELLS FARGO BANK, N.A., according to an Illinois Uniform Commercial Code filing
EZ PAWN HOLDINGS, INC., of 1901 CAPITAL PARKWAY, AUSTIN, TX 78746 (financed by Wells Fargo Bank, N.A., as recently as April 13, 2004, according to Uniform Commercial Code filings);
ADVANCE AMERICA CASH ADVANCE CENTERS, headquartered as 135 NORTH CHURCH STREET, SPARTANBURG, SC 29306, multiply financed by Wells Fargo, including in 2004;
PAYDAY INC of 5021 INDIAN SCHOOL RD NE, ALBUQUERQUE, NM 87110
PAYDAY PLUS of 425 HILL AVENUE, GRAFTON, ND 58237, financed by WELLS FARGO BANK NORTH DAKOTA, NATIONAL ASSOC
PAYDAY LOAN MANAGEMENT, INC. of 1901 CAPITAL PARKWAY, AUSTIN, TX 78746, financed by WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION
AUTO PAWN, INC. of 7534 HICKMAN RD, DES MOINES, IA 50322, financed by WELLS FARGO BANK IOWA, N.A., according to Iowa UCC records;
PAYDAY LOANS III, L.L.C. in Idado, financed by WELLS FARGO BANK, N.A.
PAYDAY EXPRESS, of 4302 SOUTH 24TH STREET, OMAHA, NE 68107, financed by WELLS FARGO BANK NEBRASKA, NATIONAL ASSOCIATION
1 STOP CHECK CASHING $ PAYDAY & TITLE LOANS, LLC, financed by WELLS FARGO BANK, NATIONAL ASSOCIATION, according to a May 6, 2004, Arizona UCC filing
TITLE LOANS EXPRESS, INC. of 4295 SAN FELIPE, HOUSTON, TEXAS 77027, financed by WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION
MAC DIANE'S PAWN CENTER in Michigan;
and, again, ARMED FORCES LOANS INC. of 3824 S JONES STE G, LAS VEGAS, NV 89103...
This is being raised, including to the Federal Reserve; developing...
Update of June 14, 2004: Alongside the other Wells Fargo Financial news last week, the actual Maryland Commission on Human Relations subpoena on WFF was interesting. Among other things, it asks for "any and all underwriting guidelines, policies and standards of WFF applicable to applications for loans secured by residential real estate (owner occupied) in the State of Maryland at any time during the period of January 1, 2002 to the present."
Update of June 1, 2004: Loving sleaze of any kind, Wells last week bought disgraced mutual fund company Strong Financial Corporation, for $500 million...
Update of May 17, 2004: Wells keeps chewing up insurance agencies, most recently in Dayton, Ohio, the Baldwin & Whitney Insurance Agency., swallowed by Wells' Acordia, which lists itself as the world's sixth largest insurance brokerage, with more than 150 offices in 38 states and premiums worth $6.5 billion. Much of this business, by the way, is sleazy...
Update of May 10, 2004: Who knew? Wells Fargo Financial, the subprime lender, has a basketball team in Guam. The Pacific Daily News of Hagatna, Guam, on May 3 reported that Wells Fargo Financial got some big help from its big men to win 58-43. Wells Fargo Financial power forward Conrad Berg had 17 points." Fast break for predatory lending! Including, as ICP asserted and is tracking, Wells' export of predatory lending...
Update of May 3, 2004: at the shareholders' meeting last week, Wells CEO Dickie the K at least had to respond to the predatory lending issues, even if this response consisted of adamant and repeated denials...
Update of April 26, 2004: Last week, ICP attended and raised predatory lending issues at Citigroup's annual shareholders' meeting (click here to view ICP's report). Similar question are on the agenda for AIG's annual meeting. This week in San Francisco, Wells Fargo's shareholders are meeting, to vote among other things as Item Six on a resolution that would merely provides that the "Board conduct a special executive compensation review to study ways of linking executive compensation to successfully addressing predatory lending practices." Wells Fargo is recommending that shareholders vote against the proposal, claiming that it already has anti-predatory lending policies in place (using an absurdly narrow definition of predatory lending, from the Office of the Comptroller of the Currency, which has "enhanced" the national bank charter with laxity and preemption). But nothing is said -- neither in the proponent's statement nor Wells Fargo's response -- about whether even Wells' weak U.S. "safeguards" apply to its lending outside of the U.S.. We think not... ICP posed this question directly, at the Citigroup shareholders' meeting (again, click here to view ICP's report); we'd hope Wells will be made to answer it in San Francisco...
Update of April 19, 2004: Quiet but greedy: it turns out that Dick Kovacevich is the seventh highest paid CEO, when one cumulates salary and cashing in stock options and incentives, at a whopping. $35.9 million...
Update of April 12, 2004: Wells Fargo Home Mortgage's manager for the Dakotas, Conley Ruud, was hard-selling loans last week, gushing that "It still is a good time to get in on the low rates, whether you're looking to buy your first home or trade up to a larger home. It makes sense to do it now, while rates are really good. It's a no-brainer." When asked for his volume, the response was that Wells Fargo does not release numbers of mortgages processed...
Update of April 5, 2004: Wells-o-rama: The ruling In re Willard, Paul and Julie, 14 CBN 274 (Bankr. D. Nev. 2004) -- The bankruptcy court sanctioned a national mortgage company and its local counsel for filing an inaccurate motion for stay relief and then not acting promptly to correct their mistake. What it means: Creditors may be held responsible for not providing accurate information to their counsel and then not cooperating with debtors to correct the mistakes caused by that inaccurate information. Summary: Wells Fargo Home Mortgage Inc. asked the bankruptcy court to lift the automatic stay because the debtors, who filed for Chapter 13 relief on Jan. 2, 1999, had missed payments due for May, June and July 2003. Subsequently, the lender's counsel acknowledged that a mistake had been made and that the missing payments were for September 2001 and December 2002. The debtors provided the lender's attorney with copies of the checks used to make these payments and notified counsel that they would seek Rule 9011 sanctions if the motion to lift the stay was not withdrawn within 21 days. The motion was withdrawn, but it took 24 days. The court sanctioned the lender's attorney 4,900 for not amending the motion as soon as he became aware of the error and for not withdrawing it as soon as he was offered proof of the debtors' payment. The court sanctioned Wells Fargo 25,000 for showing a "complete disregard for their duty to borrowers."
Update of March 29, 2004: Wells has amended its SEC filing to admit that it contributed $41,350 in corporate funds to various political entities and candidates in 2003. Fancy footwork, in advance of the annual shareholders' meeting... Moving to take over Wells Fargo's Nebraska operations is Terry Zink, who last week was quoted that ""The challenge is to let people know that we're more than a bank." Yeah -- Wells is a predatory lender, too.. Zink also said that he "supervised banks spread around several Los Angeles suburbs, a region that he said lacks a sense of community." But that's not what he said while in California... Typical Wells duplicity.
Update of March 22, 2004: Wells, home of the lost laptop with customer data, has now been hit with two concerted "phishing" campaigns in the last week. In a press release, Wells says it's "in no way involved in the distribution of this hoax e-mail" and as a policy would never ask for private customer information by e-mail. Wendy Grover, senior vice president of corporate communication at Wells Fargo, said the company is working with local authorities to handle the matter and has instructed bankers to follow normal bank procedure in dealing with fraud by closing any accounts that are impacted...
Update of March 15, 2004: More on Wells' subprime auto loans: on March 11, Fitch rated Wells Fargo Financial Auto Owner Trust 2004-A asset-backed notes, stating that "the 2004-A transaction marks Wells Fargo Financial, Inc.'s (WFF) first securitization. The 2004-A notes are backed by a pool of subprime retail installment sales contracts secured by new and used automobiles and light duty trucks"...
Update of March 8, 2004: On March 5, Wells Fargo Financial Retail Services announced with scanty details that it "will a provide a private-label credit card program for Gallery Furniture, a Houston-based retailer that sells more than $150 million in furniture annually. The program will include a dedicated line of credit for Gallery Furniture customers that promotes greater shopping frequency." Sort of like with Wells Fargo Financial's own flipped loans -- the more frequent the churning, t he more profitable...
Update of March 1, 2004: How 'bout high cost auto lending? It's another of Wells Fargo's businesses. According to Reuters, Wells was "readying a bond pooling nonprime auto loans worth $500 million, market sources said on Monday [Feb. 23]. This is Wells Fargo's first non-prime auto loan bond, sources said. The offering, Wells Fargo Financial Auto 2004-A, has Citigroup and Deutsche Bank Securities as lead managers"...
Update of February 23, 2004: from Inner City Press' Wells Fargo mailbag:
To: WellsWatch [at] InnerCityPress.org
I thought I was the only one Wells Fargo has victimized but from reading the articles on your site, I can see I'm not alone. At present, Wells Fargo is foreclosing on my home... I was behind on my payments, but have since caught up. They have my money and are still attempting to foreclose on my home... Wells Fargo advised me to reinstate the loan I need to pay over $9,000... Plus their attorney is trying to gouge me with their fees again.
Update of February 16, 2004: While anti-predatory lending laws are being preempted and / or abandoned in the continental United States, in Guam an interesting proposal is moving forward: Bill 173, introduced by Sen. Rory Respicio, D-Chalan Pago, would amend and update the property attachment and execution exemption law. It states that a debtor's homestead are exempt from seizure for the claims of creditors. It also lists personal property exemptions, including furniture, tools and books used for work, clothes, two firearms, and motor vehicles for each member of a family. The bill is being opposed by industry, including U.S.-based subprime lender Wells Fargo Financial. It is now pending in the Committee on Judiciary and Transportation... If Wells Fargo can export predatory lending, consumer protection, too, must be exported... Meanwhile, the search for the truth about Wells Fargo continues. Last week, Inner City Press filed a Freedom of Information Act appeal with the Federal Reserve Board in DC of the FRB's decision that, regarding Wells Fargo, "547 full pages and portions of other pages will be withheld from you." ICP has re-requested numerous purportedly "Confidential" Exhibits - "Question 5 - Exhibit 1" (regarding relationships with subprime lenders); "Question 6 - Exhibit 1" (regarding overrides); "Question 8 - Exhibit 1" ("Store bulletins" regarding credit insurance sales); "Question 9 - Exhibits 1-4;" "Question 10 - Exhibit 1" ("Deferred Origination Fee Waiver Policy," etc);
"Question 11 - Exhibits 1-13;" "Question 12 - Exhibit 1" (regarding Wells' supposed "Tangible Net Benefits Test"); "Question 16 - Exhibit 1" (regarding Wells' own payday lending) and "Question 17 - Exhibit 1" (Wells relations with other payday lenders), etc.. The results of this FOIA appeal will be report on this site, upon receipt..
Update of February 9, 2004: from the mailbag:
Subj: My Wells Fargo account
Date: 2/6/04 5:29:35 PM Eastern Standard Time
From: [Name withheld]
To: WellsWatch [at] innercitypress.org
...I began receiving an almost daily series of phone calls. Because the message started once my phone picked up the call, all I was able to hear was a phone number and not much else. About a week later, I finally called the number, found out it was Wells Fargo calling, and kept on the line. It was virtually impossible to reach a human, but I was able to do so eventually. The person on the phone asked me to verify my information, then proceeded to ask me a series of what I considered to be harassing questions (i.e., "Are you living in the mortgaged property and do you plan to keep it?"). Eventually I was able to pin the person down, and all this was about a (by then) 26 day late payment. I asked for the exact address to which I should send the payment, and the next day overnighted it from my place of employment.
Imagine my shock on Feb. 5, over a week later, to find another phone call on my machine from guess who? I called and they had never posted the payment to my account! On my electronic banking, I was able to see that indeed the check had been cashed the very next day, and that it was received at the address I sent it to. I was virtually forced to do an electronic payment because they threatened foreclosure on my mortgage. They did say they would open a trace on the first check I sent, and I was to call the next day (today).
I called this morning and they would not give me any information, saying that it was still an "open investigation." So then I went in to a local branch here, and finally I was able to get someone to say that they were posting the first check and that everything would be straightened out by Monday. So, all this to ask a question: To whom do I write to register my complaint?
Our interim answer: write to the Office of the Comptroller of the Currency, which claims to be on top of Wells Fargo's mortgage company, and all other national banks and their operating subsidiaries... Fax (according to the OCC's web site) to 713-336-4301 -- and let us know what happens next...
Update of February 2, 2004: Among the documents belatedly provided to Inner City Press by the Federal Reserve are a series of e-mails, in August 2003, from Wells Fargo's Bruce U. Morland to the Department of Justice and to Fed staffers -- communications that Wells Fargo should have, but did not, provide to ICP and other (antitrust) commenters. Ah, transparency...
Update of January 26, 2004: Last week Wells CFO Howie Atkins denied that Wells sees a need to do a big deal (i.e., Wachovia), but rather will continue to focus on smaller deals, like 2003's of Pacific Northwest Bancorp take-over. Regarding that deal, the Federal Reserve is only now getting around to ruling on ICP's FOIA appeal -- the documents, they say, are coming...
Update of January 20, 2004: Wells Fargo Home Mortgage, the nation's largest mortgage lender, said that since mid-December "a couple dozen people" have received notices they would be laid off in 60 days. The West Des Moines-based company would not say how many temporary workers have been let go. It would say only that it "made incremental changes" among that work force more than 60 days ago. --from the Des Moines Register's intrepid S.P. Dinnen.
Update of January 12, 2004: following the Comptroller of the Currency's preemption order last week, the Hartford Courant caught Wells Fargo gloating: its spokeswoman Janis Smith mouthed the pabulum that "A patchwork of inconsistent rules passed by states and municipalities is not in the best interest of either consumers or businesses." Yep, let's count on Wells Fargo Financial (and CitiFinancial, Chase and Household) to tell us about consumers' best interests...
Update of January 5, 2004: In the run-up to Christmas, Wells Fargo Home Mortgage announced that it would lay off 170 people who process, underwrite and close home loans and refinancings, from its operations center in Riverside, California...
Update of December 29, 2003: the SF Chronicle of Dec. 23 notes that Wells Fargo, too, says it has "received queries from regulators" in the mutual fund scandal probe... Happy holidays.
Update of December 22, 2003: in the San Francisco Chronicle of Dec. 21, David Lazarus asks some good questions:
In light of the recent theft and subsequent recovery of a computer containing sensitive information on thousands of Wells Fargo customers nationwide, people doing business with the bank have every right to be asking: Why did Wells hand the names, addresses and Social Security numbers of so many customers to an outside consultant? Why was that consultant permitted to store such information on a computer in his office, located in an unlocked commercial suite adjacent to a Concord sports bar? What lessons has the San Francisco bank learned about outsourcing customer data? At this point, Wells Fargo is saying little more than "no comment."
That's not going to cut it...
Update of December 15, 2003: According to the National Mortgage News of Dec. 8, of the top ten subprime lenders, Wells Fargo's production rose fastest, by 137%, comparing the third quarter of 2003 to the previous year... Meanwhile, we reiterate: Bank of America securitized Wells Fargo's subprime loans. How and who will address this, in the Bank of America-Fleet proceeding, remains to be seen...
Update of December 8, 2003: Wells' corporate welfare is not limited to Des Moines or even to Iowa: take Springfield, Illinois, for example, where Wells Fargo Home Mortgage has broken ground for an office building. Wells is getting government "assistance," including $350,000 in motor fuel tax funds...
Update of December 1, 2003: earlier this year, Inner City Press reported on Wells Fargo's quiet attempts to export its subprime (and predatory) lending outside of the U.S.. Well, the Toronto Star of Nov. 25, 2003, now reports that Wells "has a presence in Canada with Trans Canada Credit Corp., a high-interest consumer loan company that offers mortgages to those with a poor credit rating. Now Wells Fargo has branched out in Canada with a new division called HomePlan Mortgage that will do business with a focus on those who would be rejected by a bank. It will accept business from mortgage brokers starting tomorrow. Maurice (Moe) Forget, vice-president and general manager, told the annual conference of the Canadian Institute of Mortgage Brokers and Lenders yesterday that HomePlan will lend up to 85 per cent of a home's value one year after a discharge from bankruptcy, and 100 per cent after two years... Forget won hoots of approval from brokers when he announced the loans for the recently bankrupt, or at least those who have re-established a record of repaying smaller loans."
Moe Forget - you can't make this stuff up... The American Banker of Dec. 1, 2003, says that ICP-published novel Predatory Bender "blend[s] the images of companies such as Citigroup Inc. and Bank of America Corp. One section reads: 'While ostensibly the fruit of three decades of community struggle, the land beneath the mall was owned by Anguilla-based EmpiBank. The anchor tenant, too, was a part of Empi's empire: a storefront office in the high-rate lender EmpiFinancial. Jack Bender had worked for EmpiBank on the outskirts of Charlotte, North Carolina, the so-called Queen City.'" -- yep... To those two you could add Wells Fargo Financial -- practices like its are described in both the novel and the afterword.... Click here for more.
Update of November 24, 2003: our question this week is, who knew that Wells Fargo securitized its subprime loans through Bank of America? This is detailed in Inner City Press / Fair Finance Watch's comment to the Federal Reserve on BofA-Fleet (click here to view); some of the deals are:
CIK Company State
0001224458 ABFC MORTGAGE LOAN ASSET BACKED CERT
SERIES 2003-WF1 MD
SIC: 6189 - Asset-Backed Securities
0001201861 ABFC MORTGAGE LOAN ASSET BACKED
CERTIFICATES SERIES 2002 WF2 NC
SIC: 6189 - Asset-Backed Securities
0001169498 ABFC MORTGAGE LOAN ASSET-BACKED CERTIFICATES SERIES 2002-WF1 NC
0001170159 ABFC MORTGAGE LOAN ASSET-BACKED CERTIFICATES SERIES 2002-WF1 NC
ABFC is Asset Backed Funding Corporation, 100% owned by Bank of America... In corporate welfare follow-up news, for Wells Fargo Financial's planned nine-story building in downtown Des Moines (north side of Walnut Street between Eighth and Ninth streets), "[t][he city is prepared to put up more than $10 million in assistance over 20 years." That's a lot of money, to host a predatory lender...
Update of November 17, 2003: talk about grassroots -- in Greensboro, NC, Wells Fargo Financial will open another predatory -- oops! subprime -- lending office, in the "Granite's Shoppes at Wendover Village." Yuck. Meanwhile, state-by-state action on predatory lending, including Wells', is addressed in this new ICP map, which may be of use during the BofA-Fleet process -- click here to view and use.
Update of November 10, 2003: Discrimination by Wells Fargo Financial is not only by race, ethnicity and gender -- on Nov. 3, the EEOC announced a settlement in an age-discrimination lawsuit against Wells Fargo Financial Texas. After EEOC-initiated mediation failed, the federal agency filed a lawsuit in U.S. District Court for the Western District of Texas, San Antonio Division, in June...
Update of November 3, 2003: Barron's of November 3 lists, as possible Wells Fargo targets, the following three banks: Suntrust, Bank One, and PNC. Regarding this last, see ICP's Bank Beat report....
Update of October 27, 2003: Wells Fargo's earnings announcement last week included this: that revenue at its subprime (and, separately, predatory) unit Wells Fargo Financial rose by 20% compared to the 3rd quarter of 2002; operating profit was up 32% to $121 million. Gouging is profitable...
Update of October 20, 2003: in the Federal Reserve's Wells Fargo Orders last week, the Fed acknowledges disparities in Wells Fargo's lending to African Americans and Latinos - higher than aggregate denial rate disparities, and low penetration rates in "minority" census tracts. Order at 15. But the Order dodges the fee-gouging issues (note 18), and, in dealing with WFF and Island Finance, expects the commenters to show the full range of interest rates (rather than having asked Wells Fargo for that information). So we'll be pursuing it...
Update of October 13, 2003: at the Consumer Banker Association's Fair Lending Conference, the associate general counsel of Wells Fargo Home Mortgage, Heidi Mason, pontificated that "If you don't proactively manage relationships, you will be liable, especially in the court of public opinion." Mason said there are "checklists available all over the place" that detail red flags, such as litigation and complaints filed against a company. "Make sure you have fair lending policies and add these to your agreements with third parties... Controls and monitoring are important, too," Mason said, noting that lenders should establish policies governing maximum broker compensation and loan origination fees, total fees and the types of fees that can be charged. All very nice sounding -- but not consistent with the policies of Wells Fargo Financial, not in the U.S. and even less so overseas...
Update of October 6, 2003: we'll be back on the Wells - corporate welfare beat -- but last week, we obtained via a Freedom of Information Act request summaries of some complaints against Wells Fargo Financial (in the below, the "Company," with addresses including Des Moines, Edina MN, Sioux Falls SD, including:
- "company calls and harasses consumer at work and consumer has asked company to stop calling them at work;"
- "Consumer received payment notices for an account he knows nothing about;"
- "Consumer sent the company a check to pay off their loan and close the account. Company did not close the account;"
- "Consumer co-signed on a vehicle and the company repossessed it without written notice, while consumer was current on payments;"
- "Company tried to convince consumer to take out another loan and she said no. Consumer says the company deposited money in her account anyway;"
- "Consumer took out a loan with the company and used her vehicle as collateral and gave the company the title to her vehicle. Consumer has paid off the loan but the company is given her the runaround on returning her title;" etc..
What's striking in all this is how the predatory problems at Wells Fargo go well beyond mortgages (and, as detailed below on this page, beyond the United States)....
Update of September 29, 2003: More on Wells and corporate welfare -- and, this time, the Federal Home Loan Bank System providing property to a predatory lender. It was reported on September 22, "the Federal Home Loan Bank of Des Moines said it may consider selling another piece of property in the same block [of downtown Des Moines] to Wells Fargo." Wells is "looking at possible locations for expanding its nationwide consumer finance unit, which has headquarters in downtown Des Moines." Wells has lined it up to "receive about $20 million in incentives from state agencies if it builds in the Des Moines area. The company is seeking an additional $25 million in incentives from West Des Moines, mostly in the form of the city paying for extending streets, water lines and sewer lines to a new office complex. Officials have said that if Wells Fargo Financial expands in downtown, Des Moines would be expected to provide additional incentives, probably in the form of employee parking." (Predatory lenders need parking, mind you -- but from the Federal Home Loan Bank System?) "The downtown property acquired last week is directly across Walnut Street from the $90 million addition completed last year at Wells Fargo Financial's headquarters... The 91-year-old building, called the Davidson Building, houses Schaffer's Bridal & Formal Shop and a handful of small businesses. The building is assessed for tax purposes at $524,500. A parking lot owned by Federal Home Loan Bank is immediately west of the Davidson Building... Nicky Schissel, a spokeswoman for the [FHLBDM], said 'there have been conversations with the city' about turning the bank property between Eighth and Ninth streets over to Wells Fargo for development." Well(s), developing...
Update of September 22, 2003: Wells Fargo and corporate welfare: by threatening to leave to an unnamed state, Wells managed to corral over 40% of Iowa's statewide Department of Transportation's RISE grant allotment. RISE stands for Revitalize Iowa's Sound Economy, but it sounds like it's Wells' economy that's being revitalized. The money would be used to pay for a new section of 74th Street and improvements to Grand Avenue that will provide access to the proposed new Wells Fargo campus south of I-80 and west of I-35. The project has a total cost of $13.8 million, the remaining $3.9 million of which would be provided by the city through the issuance of tax increment financing (TIF) bonds. Wells claims that another state is "competing" to gets a new Wells Fargo Financial back office... Wells shakes down municipalities like WFF shakes down customers, it seems...
Update of September 15, 2003: speaking late at the Lehman Brothers financial industry shin-dig September 8, Dick Kovacevic sang a song of Wells Fargo Financial:
Wells Fargo Financial -- our consumer finance company -- was the crowned jewel of Norwest in the 80's and early 90's. Their growth slowed in the 90's and earning fell in 1997 and 1998 because of a planned pull back in their business due primarily to irrational competition. A new management team and focus in late 1999 began a turn around for the company... In the past, Financial focused too much on their higher ROI unsecured lending business, and gave up growth opportunities in the lower ROI, but faster growing real estate and auto secured (ph) lending segment... Our focus is selling all the financial products our customer needs or cross selling... For consumer households that we sell them two products we make on average of about $200 a year. If we sell that same customer nine or more products we make $872 a year... Part of our effort is simply getting existing Wells Fargo customers to buy from us what they're already buying from other providers.
Yeah-- like loan sharks.
Update of September 8, 2003: In a September 4 response to additional Federal Reserve questions, Wells Fargo among other things prevaricated thus: "Wells Fargo Financial "does not classify credit as prime or subprime as a factor in setting APRs. However, the vast majority of WFF's real estate loans are to customers who would typically be characterized by others as subprime." Wells then describes providing some of WFF's customers with the phone number of Wells Fargo Home Mortgage -- but claims those cold referrals are based on the product requests (i.e., no cash out), not on credit score. So the obvious next question: does WFF offer a prime product? Or, to deal with Wells evasion, does WFF offer a product which "would typically be characterized by others as subprime"?
Squib of September 1, 2003: Ah, Wells... On August 26, Wells vaguely announced, without specifics, a proposal to acquire Benson Associates LLC, a institutional money manager with $1.3 billion of equity assets under management for "undisclosed terms."
Update of August 25, 2003: No response yet from the Federal Reserve on the Freedom of Information Act appeal for what Wells Fargo is trying to withhold. In the interim, we've noticed yet another way in which Wells' "Island Finance" has even weaker compliance programs than Wells Fargo Financial. In response to a Fed question for subprime lending volume data by product, Wells Fargo has stated that "[b]ecause Island does not track volume along product lines these numbers are not broken down in that fashion." This statement is not made for Wells Fargo Financial...
Update of August 18, 2003: the Federal Reserve has asked Wells Fargo a number of questions about its community reinvestment and fair lending performance, particularly about its subprime lending operations. On July 21 and July 25, ICP raised issues to the Fed concerning a particularly Wells subprime subsidiary, based in Puerto Rico and active within and outside of the United States, named Island Finance. On July 31, the Fed asked Wells seventeen questions, including "[d]escribe in detail Wells Fargo's corporate programs to monitor compliance with the fair lending and consumer protection laws and regulations... Include in your response a description of any policies, procedures, and practices with respect to... complaints," by subsidiary.
In its August 11 response, Wells states that "Island Finance does not have a specialized customer service department or a toll-free telephone number for complaints. Customers who have complaints contact the store handling their account. If the store is unable to resolve the complaint the complaint if referred to the district manager. If the district manager is unable to resolve the complaint it is referred [to] the district manager's supervisor."
That Island Finance has even less consumer protection safeguards that Wells Fargo Financial's overall operations is significant -- and potentially violative of the Fair Housing Act and Equal Credit Opportunity Act, given the demographics of Island Finance's headquarters and its lending operations. ICP has now raised this to the Fed. Wells has also requested "confidential treatment" for large portions of its response, which ICP has now re-requested under the Freedom of Information Act. Developing...
Update of August 11, 2003: Wells Fargo is becoming used to getting kicked around, being confronted with detailed tales of predatory lending... So, in its August 7 response to the Federal Reserve to ICP's comments, Wells summarized that "ICP references... customer examples," and then states:
"It is Wells Fargo's policy to deal directly with customers on any issues that may arise in their relationship with us. We have a long-standing policy and process for responding to customers who have complaints. We research those complaints carefully and as promptly as possible and if we have erred, we do what is right for the customer. Due to financial privacy concerns, we cannot and do not discuss our customers' financial matters with nonparties to the transactions."
Which is a fancy way of saying, "We're not going to answer, nya nya, nya"...
Update of August 4, 2003: Here's been Wells Fargo's response, to date: a Wells spokesperson named Christie Drumm said (in a monotone, presumably) that "the allegations are without merit" (that's from the Rocky Mountain News); to the L.A. Times, an unnamed Wells spokesman was even more evasive, pointing to Wells' banks' CRA ratings when a main issue is Wells' non-bank finance company. The LA Times reported (correctly) that "Inner City Press maintained, Wells Fargo is 'exporting these practices' to the Caribbean through Island Finance, a Puerto Rican consumer-finance lender it owns." Wells' outgoing general counsel Stanley Stroup mailed in a letter purporting to respond to the issues ICP has raised -- but it limited itself, for now, to ICP's initial letter which asked for an extension of the comment period. And Wells' response on the predatory lending issues, including those beyond the continental 48 states?
ICP's July 25, 2003 comment:
July 25, 2003
Board of Governors of the Federal Reserve System
Attn: Chairman Alan Greenspan, Governors, Secretary Johnson
20th Street and Constitution Avenue, N.W.
Washington, DC 20551
Re: The applications of Wells Fargo & Co. to acquire (1) Pacific Northwest Bancorp & Pacific Northwest Bank, Seattle, Washington AND (2) Two Rivers Corp. & Bank of Grand Junction, Grand Junction, Colorado
Dear Chairman Greenspan, Governors, Secretary Johnson, et al.:
On behalf of Inner City Press/Community on the Move and its members and affiliates, and the Fair Finance Watch (collectively, "ICP"), this is a second timely comment in opposition to the applications of Wells Fargo & Co. and its affiliates ("Wells Fargo") to acquire Two Rivers Corp. & Bank of Grand Junction, Grand Junction, Colorado ("Two Rivers"), and Pacific Northwest Bancorp & Pacific Northwest Bank, Seattle, Washington ("Pacific Northwest"). ICP initially commented on both applications on July 21, and asked for an extension of the Two Rivers comment period; on July 22, ICP received phone message from Board staff extending the Two Rivers comment period until July 25.
Beyond the 2001 Home Mortgage Disclosure Act ("HMDA") analysis, citations to the public record on Wells' ties to payday lenders, etc., in the July 21 comment, and while continuing to await the FRB's too-slow release of the 2002 HMDA data, this submission directs the FRB to certain of Wells Fargo's subprime-lending affiliates, particularly those operating standardlessly outside of the continental United States, in Canada, Panama and elsewhere. First, a sample consumer abuse by Wells Fargo in the U.S., based on messages directed to ICP, and documents annexed hereto:
In a message dated 5/28/03 10:07:14 PM Eastern Daylight Time, [ ] @bellsouth.net writes: [to ICP's Wells Watch]
Hello,
Are you aware of anyone having problems with Wells Fargo giving false information to credit bureaus. I have had them for two years now, have never had a late payment and yet they are reporting that I have 8 late payments (4 of which are 90 day lates) I have been trying since the first of January to fix this and I am getting nowhere....
Then:
In a message dated 7/22/03 6:56:44 PM Eastern Daylight Time, [ ] @bellsouth.net writes:
...They say because I am in bankruptcy that they have to report it in a special way, that they are not reporting me late at all but the credit report has lates all over it. I have had a perfect payment history for two years and yet I am now refinancing at higher rate because they have all of those lates on my report. Every time I get it corrected with the bureaus I have to wait a couple of months but I just get more new lates from Wells. They have sent me a payment history showing I have not had any lates but again by the time I get that to the bureaus I have new lates on my report. I will see what I can fax...
And see attached, which we are asking the FRS to act on. See also,
Subj: Wells Fargo Bank
Date: 7/11/03 9:25:55 AM Eastern Daylight Time
From: [Jeffrey W.]
To: [WellsWatch at] innercitypress.orgHello, I noticed [your work] regarding Wells Fargo Bank. I am enclosing a copy of a letter that I am sending to the bank. If you have any questions, please contact me. Thanks.
July 11, 2003
Mr. Alan Johnson, President
Oregon and Washington Region
Wells Fargo Home Equity
Post Office Box 4233
Portland, OR 97208-4233Re: Complaint, Fraud and Abusive Billing Practices
Dear Mr. Johnson:
I am writing to complain about Wells Fargo's deceptive home equity operations. To give you some background: I had a home equity loan with Wells Fargo for several years. I paid the loan off in January 2003 because of very poor customer relations.
These relations culminated in a phone conversation with a representative of your bank when she told me she could not provide the figures to quote me the amount of interest in dollars that I would be paying over the future of the loan. I was told that it "was a complicated formula and I would have to figure it out myself".
Since I have paid the loan off, I have been besieged with offers from your company to reopen the loan; I have refused all offers to deal business with your company. Over the past several months, I have been receiving a monthly bill from your company for $50.00. There is no explanation on the bill for this charge.
When I called your very rude employees, I was told this was my charge for a "home equity access fee". When I explained that I did not want this service, I was told I would have to send a fax to your company telling them in writing that I did not want this service. They would not do this via phone message.
Mr. Johnson, isn't it a bit ridiculous to have to send a letter or fax telling a company that you do not want a service that you never requested in the first place? A service that I am currently being charged $50.00 monthly? What if other companies were to adopt this same practice? I work in the healthcare industry; we do not send indiscriminate bills out to our patients, with a caveat of requesting they notify us in writing if they do not want this service.
So here is it in writing: I do not want this service, I do not wish to do business with Wells Fargo, ever again. Please purge me from your mailing, e-mail and telephone call listings. I would also like a written explanation as to why this policy exists within your organization. Thank you.
Sincerely,
Jeffrey W.
CC: Inner City Press
And see attached, which we are asking the FRS to act on.
ICP first became aware of Wells Fargo's subprime lender Island Finance in 1997, when the company (1) opened an office at 2866 Third Avenue in the South Bronx which charged 25% interest rates to all customers, without regard to credit history, then (2) closed the office and required the customers they'd lured to travel to a Wells Fargo Financial office in Queens or have "lates" imposed on their credit history (see supra, and see Village Voice of July 15, 1997).
Wells' Island Finance is (sub-) headquartered in San Juan, Puerto Rico, and has branches in Panama, Aruba, the U.S. Virgin Islands, and the Netherlands Antilles. It is a high-rate lender, and is also embroiled in litigation with its employees. See, e.g., Jagroop v. Island Fin. V.I., Inc., (U.S. District Court for the District of the Virgin Island, Division of St. Croix), 240 F. Supp. 2d 370; 2002 U.S. Dist. LEXIS 25153. Tellingly, Wells CEO Dick Kovacevich lobbied in person in May 2002 against a proposal in the Puerto Rican legislature, House Bill 1288, to impose a usury cap of 19.75%. See, Caribbean Business, May 16, 2002, quoting 27% interest rates and Kovacevich that, with the proposed rate cap, " I feel I’m being told Wells Fargo is not welcome in Puerto Rico... I don’t want to be threatening, just factual," and characterizing Wells as the U.S.'s "number one 'NAFTA bank,' with more banking stores and assets than any competitor within 60 miles of Mexico and Canada." (As to Wells' high-rate lending in Canada, see infra). As Wells / Island showed in The Bronx, they charge rates right up to any applicable usury cap, without regard for the borrowers credit history profile -- that is, NOT pricing by risk.
In acquiring Island Finance, Kovacevich said that it portended further "expansion into other Latin American markets." (PR Newswire of May 4, 1995.) Subsequently, Wells also acquired a consumer finance company in Argentina, Finvercon S.A. Compania Financiera , which resulted in litigation: see, 86 F. Supp. 2d 212. At the time, Wells stated that one-quarter of its WFF consumer finance stores "is outside the 50 U.S. states," noting that it had recently also "acquired Reliable Financial Services, Inc., an auto finance company headquartered in Rio Piedras, Puerto Rico, which manages $200 million in receivables." (PR Newswire of January 12, 1998.) Wells also lists "Island Finance" subsidiaries in the Cayman Islands, British West Indies, and in Trinidad and Tobago, and operates under the name "Financiera el Sol" in Panama. [FN: It also appears that Wells / Island operate as "Credisol" in Costa Rica. While WFC's 2000 10-K lists, for WFF, offices in Brazil, Hong Kong and Taiwan, there's no further mention of these stealth, presumably high-rate consumer finance operations.]
Wells Fargo is also engaged in controversial high-rate finance in Canada, under the brand name Trans Canada Credit. In New York, Wells' Island Finance charged 25% interest because that is the usury cap. In Canada, Wells' " Trans Canada Credit charges 28.9 per cent interest." See, Hamilton Spectator, June 26, 2003, Pg. C2, " Buy Now / Pay Later Plans Can Become Costly," recounting the following sample Wells loan:
The first thing Labatte did receive appeared to be a credit card statement, showing a limit of $4,150, a billing date of Jan. 23 and a due date of Feb. 23. It stated no minimum payment was owed. Two more monthly statements followed, but Labatte claimed no statements arrived in April or May. He and his spouse both worked and failed to notice the six-month deferment period had expired. By the time they started making inquiries, a representative of Trans Canada Credit informed them they'd missed the deadline for their "no-interest" offer and now owed approximately $600 in interest payments, dating back to the original date of purchase in November 2002.
In fact, Wells' Trans Canada Credit charges 30% interest annually -- but misleading consumers by quoting it monthly: "Having trouble managing your credit card debt? Perhaps I could interest you in a consolidation loan at a mere 2.5%. Sound good? Not if the rate is 2.5% per month, or a whopping 30% per annum. Yet with interest rates at a 41-year low, and prime sitting at 3.75%, I was surprised to find Trans Canada Credit pitching me such a loan recently as part of a mass mailing. To Trans Canada's credit (pardon the pun), they didn't trumpet a rate of 2.5% on their mailing. But when I phoned to get some idea of the interest rate, I was quoted 2.5% a month." See, Toronto Sun, January 20, 2002, Pg. 55, "A Costly House of Cards;" see also, Toronto Star, April 6, 2000, "High-Cost Payday Loans Prey on the Vulnerable."
Beyond Wells' enabling of payday lending in the United States -- see, e.g., Business Wire of June 11, 2002, in which the payday lender Dollar Financial Group announced an amendment to its credit agreement with Wells Fargo Bank, N.A. -- Wells owns (at least) the following insurance companies [string cite omitted] and Centurion Life Ins. Co. (MO) The last of these is described in A.M. Best's most recent company report as benefiting "from its parent's consumer lending business growth as it markets credit life and disability income products through nearly a thousand consumer finance offices of Wells Fargo." Wells in the U.S. also offers "single premium term life insurance," see, e.g., <http://financial.wellsfargo.com/consumer/insurance/index.html>. Also problematic is Wells' Aman Collection Service, see, e.g., Jackson v. Aman Collection Serv., 2001 U.S. Dist. LEXIS 22238, U.S. District Court of the Southern District of Indiana, Indianapolis Division (collection letter could not be said to not violate the Fair Debt Collections Practices Act, where it included only an unstated amount of accruing interest, and no date from which it accrued).
Wells' involvement in the subprime industry goes beyond its own lending, and encompasses its activities as master service, custodian and trustee (the latter two, mostly through Wells Fargo Bank Minneapolis). See, e.g., DLJ ABS Tr Mtg P-T Ctfs, Series 2000-3; DELTA FUNDING CORP HM EQ LN HEL SE 01 2 (Wells Fargo Bank Minnesota, National Association, custodian).
Wells was willing to serve as trustee for Delta even during the period for which it was charged with predatory lending by government agencies; the same has continued, more recently, in connection with the loans of Household International's HFC. See, e.g., the May 2, 2003, Prospectus filing for STRUCTURED ASSET INVESTMENT LOAN TRUST, Mortgage Pass-Through Certificates, Series 2003-BC3: loans by, inter alia, HFC, "Trustee: Wells Fargo Bank Minnesota, National Association." What standards for Wells Fargo have for this business? Apparently none.
We also remain concerned about the weak (and we contend weakening) performance of Wells Fargo HSBC Trade Bank. The most-recent (yet outdated) CRA performance evaluation stated inter alia that Wells Fargo HSBC Trade Bank "demonstrates no use of innovative or complex qualified investments and community development services" -- a bad sign for a bank with a wholesale designation, whose "performance under the CRA was limited to qualified investments and community development services." Id. In terms of weak performance beyond CRA, see, e.g., the San Diego Business Journal of December 2, 2002, "Former Peregrine Manager Admits to Bank Fraud," reporting that "[a]ccording to Cappel's plea, she arranged the sale of a $ 19.5 million invoice from KPMG Consulting LLC to Wells Fargo HSBC Trade Bank on or about June 29, 2001. Cappel sold the receivable to the bank as if it was valid when it really wasn't 'because Peregrine had no valid contract with KPMG Consulting LLC at the time for that amount under those terms,' the plea stated." Wells Fargo HSBC Trade Bank's lack of due diligence is another indictor of weak performance that should be inquired into in this proceeding.
ICP continues to await the release of the 2002 HMDA data. As noted, in 2001, in the Denver MSA Wells Fargo Home Mortgage denied the conventional home purchase loan applications of African Americans a whopping 5.95 times more frequently than those of whites, substantially more disparate than other lenders in this market. Additionally in Denver, WFHM denied the refinance loan applications of African Americans 3.81 times more frequently than those of whites.
In the Seattle WA MSA in 2001, Wells Fargo Home Mortgage denied the conventional home purchase loan applications of African Americans 5.55 times more frequently than those of whites, substantially more disparate than other lenders in this market. Additionally in Seattle, WFHM denied the refinance loan applications of African Americans 2.44 times more frequently than those of whites.
In light of the characterization of Wells as something of a "NAFTA bank," see supra, note that in 2001 in the Albuquerque, New Mexico MSA, Wells Fargo Home Mortgage denied the conventional home purchase loans applications of Latinos 2.82 times more frequently than those of whites. In the Austin, Texas MSA, Wells Fargo Home Mortgage denied the conventional home purchase loans applications of Latinos 3.50 times more frequently than those of whites (while also denying the applications of African Americans 2.71 times more frequently than whites). In the Houston MSA, Wells Fargo Home Mortgage denied the conventional home purchase loans applications of Latinos 3.01 times more frequently than those of whites (while also denying the applications of African Americans 3.84 times more frequently than whites).
These racial and ethnic disparities, and Wells' targeted high-rate lending, militate for public hearings, for enforcement actions and referrals, and for the denial of Wells Fargo's expansion proposals.
Communications regarding these proceedings, including Wells Fargo’s responses, any and all FRB communications with Wells Fargo, and the improperly withheld portions of the Applications, should be provided to the undersigned.
Respectfully submitted,
Matthew R. Lee, Esq.
Executive Director
Inner City Public Interest Law Center
& Inner City Press/Community on the Move
1919 Washington Avenue
Bronx, New York 10457
Tel: 718-716-3540
Fax: 718-716-3161
NOTE: For or with more information, contact us. This will be updated; stay tuned...
Update of May 26, 2003: On May 20, Wells Fargo announced a proposal to buy Pacific Northwest Bancorp for $591 million. Then on May 22, Wells announced a smaller deal for Colorado's Two Rivers Corp., which owns the Bank of Grand Junction. It operates three branches around Grand Junction... Also on May 20, Wells announced that its general counsel Stanley Stroup will retire at the end of 2003. He "was very instrumental behind the scenes in helping break down (Great) Depression-era barriers among banking, brokerage and insurance industries," said Chairman and Chief Executive Dick Kovacevich in a press statement. "He also helped influence national legislation that created interstate banking." Well now. Jim Strother, a Wells Fargo deputy general counsel since June 2001, will replace him...
Update of May 5, 2003: The California Department of Corporations on May 2 announced it has revoked Wells Fargo's state mortgage lending license, for violating California law. "If consumers were particularly savvy, they (should) see that Wells was advertising our license, and that they were obtaining the same protections from Wells as from any other licensed lender," said the Department's Andre Pineda. "The simple fact is, in the last couple of years, a consumer who thought that would be wrong." California wants Wells Fargo to issue refunds to overcharged borrowers.
Update of January 13, 2003: It has been too long, since we've reported on Wells Fargo in this space. The trigger of this report is the state of California's Jan. 10 accusation that Wells is a predatory pricer. We agree, and now report the following: at Wells Fargo Financial, the company's subprime lender, the lowest fixed interest rate being offered is 11.5% -- regardless of the credit score of the applicant. Ironically, even an applicant with a sub-600 FICO score can, through Wells Fargo Mortgage's "non-conforming" division, receive a rate between eight and nine percent. The morale of the story? If you approach Wells through the storefront office of Wells Fargo Financial, you will be overcharged in a predatory fashion. We've also learned that when Wells Fargo Financial employees leave the company, they are told that if at their next employer they refinance any Wells Fargo loans, they will be sued for $2,000 for each loan. Pretty, ain't it?
Update of October 28, 2002: on October 24, Wells Fargo announced a proposal to buy Minneapolis-based Towle Financial Services/Midwest Inc., a mortgage banking company that originates and services mortgages for life insurance firms, pension funds, real estate investment trusts and others. Towle holds a loan portfolio of $260 million, according to a Wells spokesperson. Wells already has a $30 billion servicing portfolio....
Update of August 5, 2002: on July 31, Wells Fargo announced a deal to acquire " private investment advisory firm" Nelson Capital Management; financial terms weren't disclosed.
Update of February 18, 2002: From the department of "better late that never," Inner City Press has just received a response from the Department of Justice to a FOIA request regarding the Federal Reserve Board enforcement (or non-enforcement) of antitrust laws upon Wells Fargo and its predecessor, Norwest. Among the documents received is correspondence in which Wells Fargo tries to justify having shifted deposits out of branches it had committed to divest. Wells claims that "if any procedural lapses did occur" they were "inadvertent and isolated." The Fed staffers who apparently agreed include Scott Alvarez, Dean Amel and Gordon Miller. Who knows -- maybe Wells' argument are not as ludicrous as they look. It's impossible to judge, since the most substantive portions of the letters are still redacted, and since the Fed itself never provided these letters to ICP or anyone else, despite outstanding FOIA requests. This may have to be revisited in a future proceeding. Until next time, for or with more information, contact us.
Update of February 4, 2002: Wells and woods: an SEC filing made public on January 28 disclosed that Wells Fargo has dropped its stake in Willamette Industries Inc. three percentage points to 9.4 percent. After a 14-month takeover battle, last week Willamette tentatively accepted a $6.1 billion acquisition offer from its larger rival Weyerhaeuser Co....
For 2000-2002, click here. This will be updated. For or with more information, contact us.
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