Former Wells Fargo employee says race played a factor in subprime lending

A former loan officer for Wells Fargo & Co. told Democracy Now’s Amy Goodman that accusations of racially biased lending practices at the nation’s largest mortgage provider are true.

The revelations could resonate in Iowa, where two groups have made similar accusations against the company.

Elizabeth Jacobson, who worked as a subprime loan originator for Wells Fargo in Baltimore from 1998 to 2007, said her former company would encourage subprime loan officers to go into the city and target African American churches.

….to get a relationship going with the minister or the reverend at the church and try to get that person to schedule some sort of meeting. They would call it a “wealth-building seminar” to get the parishioners of the church to attend. And any loan that was funded by Wells Fargo, whether a purchase or a refinance, $350 would then be donated to the church. And so, that was the incentive for the church to want to have these seminars there.

But what would happen is the only loan officers that would attend these seminars were generally the subprime loan officers. And on these conference calls, at one point, somebody made a joke who happened to be a white loan officer and said, “Well, will I be able to go to these seminars?” And they were told right there on the conference call, unless you were of color, you could not attend these conferences, these wealth-building conferences. So it seemed me—Wells Fargo didn’t come right out and say this; this is just what I saw—is that they wanted the African American Wells Fargo loan officers to sell loans to the African American community.

Anyone who received a loan from Wells Fargo during this period could ask that the company donate $350 to a nonprofit of the borrowers choice.

“But the way that it was sold to these churches was, well, that money then will go back to your church. Have the parishioner decide, as the church is a nonprofit, that they want that $350 to go right back to that church,” Jacobson said.

In June, Jacobson filed a sworn affidavit with a federal court in support of the City of Baltimore’s lawsuit against Wells Fargo for pushing high-interest, subprime loans onto African Americans in Baltimore and the Maryland suburbs.

In addition to the targeting of African American communities, Jacobson said there was a push to drive up the company’s subprime loan division while telling the media the company was trying to avoid the risky loans.

I just started to see, well, wait a minute, you know, we’re putting — we’re setting people up for failure, basically. And what really — the point that really made my decision that I was going to leave the company was third quarter of ’07. Wells Fargo was actually the number one subprime lender in the country. So, internally, we’re getting all these emails and all this information about “great job, we achieved our goal, we’re number one subprime lender in the country.”

And I happened to see a news report with the CFO of Wells Fargo, and he was questioned about the subprime division and denied at that point that Wells Fargo even had a subprime division. So here he is, the chief financial officer, where the subprime loans were supposed to be paying for the fixed costs of the company, and he’s denying that Wells Fargo even did subprime loans. That was just the final straw of total disillusionment, and then I put my resignation in.

Loan officers would make “three to four times as much in commission if you put somebody into a subprime loan,” she said.

Two watchdog groups have compiled data showing a similar pattern of racial discrimination in Iowa. Their numbers show that minority homeowners in Des Moines were three times as likely to receive a high cost subprime loan as their white counterparts.

So far, no legal action has been taken in Iowa.

Here is Jacobson’s full interview, via Democracy Now.