In the years since the collapse of the housing market, allegations of racial impropriety by America’s largest banks continue to surface. The latest claims come from Beth Jacobson, a former Wells Fargo loan officer who alleges that the company influenced black borrowers into overly expensive subprime loans at the peak of the housing bubble.
As the Washington Post reports, Jacobson explained the well planned actions of loan officers, who would move into areas with a high African-American population and involve themselves with local churches and community groups, all in an effort to sell poorly structured mortgages. Jacobson’s account of these practices is the first aimed at a major bank. A study conducted by the Federal Reserve in 2009 found that 55 percent of black home buyers were led toward subprime mortgages, compared to just 17 percent of white homebuyers. This startling statistic is hard to write off as coincidence.
Jacobson’s testimony will be used in one of four major court actions filed against Wells Fargo so far, all dealing with the practices of the bank’s loan officers. The Federal Reserve filed civil charges against the bank, accusing Wells Fargo of pushing minorities into subprime contracts, but the case was settled last year when the bank paid $85 million to the Reserve without an admission of wrongdoing.
Last December, a former vice president at JP Morgan told the New York Times that account executives for the company had specifically targeted vulnerable customers with limited knowledge of the mortgage process, and even limited fluency in English, and urged them into subprime contracts. Of course, a large number of these borrowers were minorities.
When the bubble finally did burst, it was those same minorities who paid the price, as blacks and Latinos were 70 percent more likely to have their homes foreclosed.