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Group Targets Argent, Wells

Housing Advocates file complaint

May 3, 2007

WASHINGTON correspondent for MortgageDaily.com

A Cleveland, Ohio-based housing advocacy group claims Argent Mortgage Co., Wells Fargo Bank and a local mortgage broker targeted predominantly black neighborhoods for predatory loans. But both lenders deny any role in predatory transactions.

The Housing Advocates Inc. filed an administrative complaint on behalf of a retired housekeeper with both the U.S. Department of Housing and Urban and the city of Cleveland, claiming the companies violated federal fair housing laws and a municipal fair housing ordinance.

Argent, Wells and local mortgage broker First National Mortgage Co. discriminated against black homeowners and home purchasers, Housing Advocates claims in its documents. The companies misrepresented loan terms, charged unreasonable fees, established impossible repayment terms, failed to consider borrowers' ability to repay the loans and failed to investigate the practices of the brokers who marketed the lender's products.

Argent has denounced the claims, while Wells Fargo has pointed out that it did not originate the mortgages.

The complaints have "absolutely" no merit, Argent spokesman Chris Orlando declared. "Our lending decisions are strictly based on objective risk factors," he said -- noting that Argent originates loans through independent mortgage brokers who work directly with borrowers.

The number of homeowners involved could increase.

Housing Advocates director Ed Kramer said in a telephone interview that the agency is reviewing complaints from about 100 other Cleveland-area homeowners to determine if they are eligible to join the legal action.

The complaints stem from a home refinance by Elizabeth Redrick, a 77-year-old Cleveland woman living on a fixed income. She decided to refinance her mortgage to pay off a $3,600 debt she owed to a finance company.

Redrick claims First National told her the new loan would lower her payments by $200 and provide her with enough cash to pay off the debt.

Although she only received $600 at closing, she wound up increasing her loan balance, paying $5,400 in refinance fees and raising her interest rate, according to the allegations.

Housing Advocates says Wells Fargo NA presently holds many of the mortgage notes. The agency has accused the California-based company of violating fair housing laws by failing to evaluate mortgage loan purchases to see if the loans were unconscionable or offered in violation of state fair housing principles.

A Wells Fargo spokeswoman said the company is not responsible for the loans.

"Wells Fargo, as trustee, did not originate and does not service the loan of Elizabeth Redrick," Debora Blume told MortgageDaily.com in an e-mailed statement. "Wells Fargo Corporate Trust Services offers a variety of fiduciary services in connection with bonds issued by public and private corporations, government entities and the banking and securities industries.

"As a trustee, Wells Fargo does not in any way supervise, monitor, oversee or have authority over how a loan is serviced, and, in fact, is legally prevented from being the servicer except in certain worst case scenarios," Blume said. "When foreclosure action is taken on a mortgage loan held in a securitized pool in which Wells Fargo is the trustee, the servicer initiates the foreclosure action in the name of the trust."

First National could not be reached for comment.

Neither Wells nor Argent had officially received the charges. They will have 30 days to respond.

Ohio has been especially hard hit with foreclosures and claims of unfair lending. Kramer said his agency has received about 1000 complaints of predatory lending in Cleveland and Cuyahoga County in the last 18 months.

Lisa D. Burden is a legal analyst for MortgageDaily.com and holds a law degree from the University of Maryland. She is currently a freelance journalist who previously wrote for Institutional Investor publications and the Baltimore Daily Record.

e-mail Lisa at: [email protected]

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