Issues addressed in recent mortgage lawsuits include lending discrimination, mortgage fraud and political contributions by two of the country’s biggest mortgage firms. In another case, a former employee of a failed reverse mortgage lender who was accused of stealing 56,000 mortgage leads has pleaded guilty.
Illinois Attorney General Lisa Madigan announced on July 31 a lawsuit filed in Cook County Circuit Court against Wells Fargo & Co. The San Francisco-based institution — along with subsidiaries Wells Fargo Bank, N.A., doing business as Wells Fargo Home Mortgage, and Wells Fargo Financial Illinois Inc. — is accused of illegally discriminating against black and Hispanic borrowers by placing them in high-rate subprime loans while giving similarly situated whites lower rates.
The company also allegedly churned minority loans — repeatedly refinancing without benefit to the borrower — and confused borrowers about whether they were dealing with the prime or subprime unit. The state claims Wells violated the Illinois Human Rights Act, the Illinois Fairness in Lending Act and the Illinois Consumer Fraud and Deceptive Business Practices Act.
Madigan said she filed the lawsuit only after an investigation found that 45 percent of blacks and 23 percent of Hispanic borrowers in 2005 received high-cost mortgage from Wells. But only 11 percent of whites received high-cost loans from the lender
“Wells Fargo established highly discretionary lending policies and procedures with weak oversight that permitted Wells Fargo’s employees to steer African-Americans and Latinos into subprime loans,” the news release said. “Wells Fargo’s discretionary policies and procedures included a compensation structure that rewarded employees for placing borrowers into high-cost mortgages.”
Defendants in a lawsuit filed by 48 North Carolina borrowers were denied a request to move the case from U.S. District Court for the Eastern District of North Carolina to a Virginia Federal Court, according to an announcement from plaintiffs’ attorneys John O’Connor and David Binkley. The Virginia court reportedly dismissed a similar case against the lenders.
The lawsuit alleges Bank of America, BB&T, Wachovia Bank, Carolina First, Cooperative Bank and Woodlands Bank colluded with developers and appraisers to fraudulently inflate new home prices. The plaintiffs’ attorneys claim the Virginia case was flawed because it would have applied Virginia law to North Carolina borrowers.
A judge has ruled against Citigroup in a $60 billion lawsuit filed in October 2008 against Wachovia Corp. and Wells Fargo & Co., Reuters reported. Citi reportedly lost the exclusive right to deal with Wachovia as a result of the Emergency Economic Stabilization Act — which was designed to address an “alarming banking crisis” and give the Federal Deposit Insurance Corporation “full flexibility to rescue troubled banks.”
A Freedom of Information Act lawsuit was filed against the Federal Housing Finance Agency by public interest group Judicial Watch, according to an announcement today. The Washington, D.C., group seeks documents tied to political contributions made by Fannie Mae and Freddie Mac — which reportedly have made nearly $5 million in political contributions over the past decade. Cited among several recipients of the contributions were President Obama and Senate Banking Committee Chairman Christopher Dodd.
FHFA reportedly claims it does not have to turn over the documents because it doesn’t control them. After FHFA’s decision was appealed and denied, the lawsuit was filed.
Bruce Jarrard plead guilty to stealing reverse mortgage leads from his former employer — defunct World Alliance Financial Corp., according to a copy of his plea agreement. Jarrard, whose case was originally filed in U.S. District Court Eastern District of Michigan during March, faces up to 20 years in prison and a fine of up to $250,000.
Jarrard, who was accused of stealing 56,000 leads, acknowledged in his plea agreement a street value of between $100 and $120 per lead.
The People of the State of Illinois, Plaintiff, v. Wells Fargo and Company, Wells Fargo Bank, N.A., also doing business as Wells Fargo Home Mortgage, and Wells Fargo Financial Illinois Inc., Defendants.
Case No. 09CH26434, July 31, 2009 (In the Circuit Court of Cook County, Illinois County Department, Chancery Division).
Thompson, et al vs. Bank of America, et al.
(U.S. District Court for the Eastern District of North Carolina).
Judicial Watch Inc., 501 School Street, S.W., Suite 700, Washington, D.C., 20024, Plaintiff, v. Federal Housing Finance Agency, 1700 G Street, N.W., Washington, D.C., 20552-0003, Defendant.
Aug. 14, 2009 (U.S. District Court for the District of Columbia).
United States of America, Plaintiff, v. Bruce Jarrard, Defendant.
Case 2:09-cr-20118-GCS-VMM, March 11, 2009 (U.S. District Court for the Eastern District of Michigan Southern Division)
