LOS ANGELES, Aug. 8, 2005 (PRIMEZONE) -- Wells Fargo loan customers in minority communities in Los Angeles filed a class action lawsuit against the lender on Friday, August 5, charging Wells Fargo with discriminatory loan practices. The complaint says Wells Fargo consistently and knowingly discriminated against borrowers in minority neighborhoods resulting in borrowers paying more for their loans than borrowers in other parts of Los Angeles County (Opal Jones, et. al v. Wells Fargo Bank, N.A., Wells Fargo Home Mortgage, et. al).
According to the complaint, Wells Fargo introduced a program in 2002 called "Loan Economics." The program gave loan officers the authority to offer discounts to loan applicants that lowered overall loan coasts. The program made Wells Fargo's loan packages more attractive to potential customers in a highly competitive refinance market. The discounts included lower application and origination fees and lower mortgage interest rates.
"The savings amounted to anywhere from $500 to as much as $10,000 per loan in origination charges," says attorney A. Barry Cappello, partner with Santa Barbara's Cappello & Noel and who is representing the borrowers with attorney Jeffrey Fleitman of the Law Office of Jeffrey Fleitman in Beverly Hills. "We believe many borrowers continue to be penalized. Some were charged higher interest rates than borrowers who were offered the discount program. Higher rates mean thousands of dollars lost over the life of the loan," says Cappello. The complaint charges that the Los Angeles area Wells Fargo manager refused to allow loan officers operating in certain Los Angeles minority neighborhoods to offer the program.
"Since 2002, thousands of loans have closed in minority communities and thousands of borrowers have been affected by the Wells Fargo policy," says Cappello. "That's why we're filing this lawsuit as a class action."
The suit charges that Wells Fargo's loan practices violate a host of laws designed to protect borrowers including the Fair Employment and Housing Act, the Unruh Civil Rights Act, the Holden Act, the Consumer Legal Remedies Act and the Unfair Competition Law.
"It is our belief that Wells Fargo thought minority borrowers were less savvy than non-minority borrowers and would not question excessive fees and charges," says Fleitman.
As representatives of the class, the plaintiffs are seeking, among other damages, an injunction barring Wells Fargo from continuing its discriminatory lending practices and restitution of the costs they incurred because of these practices.
"Redlining communities has long been an issue with insurance companies when setting policy premiums," notes Fleitman. "Now it appears that the same type of discriminatory practice is being applied by Wells Fargo when selling loans."