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| wells fargo, racial discrimination, lawsuit, cv 00990, mortgage discrimination, mary cummins, real estate appraiser, real estate appraisal, credit, black, latino, white,complaint |
Peter Christensen just wrote an article about this very important legal case. Wells Fargo is being sued for racial discrimination for rejecting mortgages of some black, Latino applicants. The lawsuit is based on appraisals and credit. They cite Andre Perry's false and misleading paper as evidence. This looks like a shakedown lawsuit to get WF to cough up a few bucks "without admitting guilt." This is what the false narrative of the alleged racist appraiser and real estate industry has given us. The government promoting the false narrative for their political agenda has caused this frivolous lawsuit. We all know based on AEI's research that blacks, Latinos are more likely to be rejected for loans based on socioeconomic factors and appraisal value. Blacks, Latinos have less income, less wealth, lower credit scores which is why they buy less expensive homes in less expensive areas.
"In March 2022, Bloomberg News published an article entitled “Wells Fargo Rejected Half Its Black Applicants in Mortgage Refinancing Boom” (registration required). Bloomberg’s researchers had combed through the data for 8 million conventional loan refinance applications in 2020 reported by lenders under the Home Mortgage Disclosure Act. The researchers saw stark differences in Wells Fargo’s approval rates for White, Black and Hispanic refinance applicants. They found that Wells Fargo approved 72% of applications from White applicants but only 47% from Black applicants. In contrast, Rocket Mortgage approved 86% of White applicants and 79% of Black applicants. For Hispanic borrowers, Wells Fargo’s approval rate was 53% versus a 79% industry average for Hispanics. Some might jump to an explanation here like “Black and Hispanic borrowers may not have the same average financial means as Whites.” Bloomberg’s research, however, showed that Wells Fargo’s approval rate was lower for Blacks in high income brackets than for Whites in low brackets.
After publication of the article, a half-dozen class actions were filed swiftly against Wells Fargo by Black and Hispanic borrowers who had been denied loans. The Federal District Court in Northern California consolidated these cases earlier this year under the new title In re Wells Fargo Mortgage Discrimination Litigation, U.S. District Court, N.D. Cal., Case No. 3:22-cv-00990.
The primary legal claims in the consolidated case are brought under the federal Fair Housing Act and Equal Credit Opportunity Act. And, the alleged damages could be substantial – borrowers denied loan refinances in 2020-2021 may have lost out on saving tens of thousands of dollars on their mortgages by being unable to lock in historically low interest rates. The operative complaint in the case principally alleges a story about disparate treatment and impact in Wells Fargo’s mortgage determinations, including the bank’s use of flawed “centralized, universal, race-infected lending algorithms” or “digital redlining.” But part of the plaintiffs’ theory is also based on alleged bias in the appraisals relied on by the bank.
Here’s a key allegation pertaining to appraisals:
Wells Fargo knowingly incorporates, without adjustment, appraisals that have been shaped by years of race-based valuation standards or appraisals affected by race-based criteria. Homes in majority Black neighborhoods are worth an average of 23% less than homes in neighborhoods with “very few or no Black residents” and of similar home quality. (Citing Dr. Andre Perry’s research at Brookings “The Devaluation of Assets in Black Neighborhoods.”).
As a result, the plaintiffs allege that “Wells Fargo’s discrimination . . . has forced those who received below-market appraisals from Wells Fargo to abandon the process with Wells Fargo and turn elsewhere.”
"Plaintiffs Aaron Braxton, Paul Martin, Gia Gray, Bryan Brown, Elretha Perkins, Christopher Williams, Ifeoma Ebo and Terah Kuykendall-Montoya, individually and as representatives of a nationwide class of similarly situated applicants for original purchase mortgage, refinance and other home mortgage loans (collectively, “Plaintiffs” or the “Class”),
Go to the below link for the rest of this important article and lawsuit.
Copy of lawsuit from same site.
Mary Cummins of Cummins Real Estate is a certified residential licensed appraiser in Los Angeles, California. Mary Cummins is licensed by the California Bureau of Real Estate appraisers and has over 35 years of experience.
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