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2 Wells Fargo Units Face Lawsuits

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In two recent lawsuits, subsidiaries of Wells Fargo & Co. are accused of targeting minorities for predatory loans, causing increased foreclosures and violating a law protecting military personnel. In other mortgage-related litigation, a Texas-based company is being sued by North Carolina, while another Texas mortgage firm is suing former employees over alleged fraud.

The mayor’s office in Shelby County, Tenn., announced today that a lawsuit was filed against Wells Fargo on behalf of the City of Memphis and Shelby County. The San Francisco-based institution is accused of causing increased foreclosures through predatory lending to minorities.

“Many of these foreclosures were caused by the irresponsible and, in many cases discriminatory, lending practices of national lenders, like Wells Fargo, who sought quick and excessive profits without regard to the ultimate consequences,” the statement said. “Today’s lawsuit filing is the first by the city and county to hold a major lender accountable and seek an injunction to stop many foreclosures.”

Blacks in Memphis have been hit especially hard by the foreclosure crisis, according to the news release.

But a similar lawsuit filed last year by the City of Baltimore was expected to be dismissed.

Terence Butler, who was activated by the U.S. Marines in September, filed a lawsuit on Nov. 30 against Wells Fargo Home Mortgage in U.S. District Court for the Northern District of Indiana, FOX Chicago News reported. Wells, which took over the loan from Norwest Mortgage Inc., allegedly continued to bill Butler even though he requested that the payments be suspended while he tries to sell the home — an alleged violation of the Soldiers and Sailors Civil Relief Act.

Plano, Texas-based W.R. Starkey Mortgage, L.L.P., was among three companies
sued in a North Carolina superior court on Nov. 18 by the state’s Attorney General Roy Cooper. The defendants are accused of operating an elaborate scheme that deceived borrowers into taking out mortgages on overpriced manufactured homes that they couldn’t afford.

W.R. Starkey made the purchase mortgages between January 2007 and September 2008 and allegedly profited from two discount points charged. The points paid had no impact on the interest rates received by the borrowers, according to the state. Borrowers reportedly were shocked to see payments at closing that were hundreds of dollars more than they had been promised. But $2,000 to $5,000 in cancellation fees made it cost prohibitive to back out of the purchases at that point.

An injunction halting the alleged scheme as well as restitution is sought by the state. Cooper said he has already won a temporary court order against several of the defendants.

Commercial State Bank in El Campo, Texas, filed a civil lawsuit in the 23rd District Court on Oct. 23 against former vice president Patrick Hlavaty and former employees Michael Paul and Jeff Strnadel, the Leader-News reported. Also named as defendants are Larry Tew, the Lending Center, Waldron Development Company Inc. and Mark, Blake and Marshall Waldron. Two of the defendants deny claims that they defrauded the bank.

State of North Carolina ex rel., Roy Cooper, Attorney General, Plaintiff, v. Phoenix Housing Group Inc., et al.

Case No. 09CY32513, Nov. 18, 2009 (In the General Court of Justice Superior Court Division).

The State of Colorado, Plaintiff, v. Independence Planning LLLP dba Alternative Lending of Colorado, a Colorado limited liability limited partnership; JAMES W. DALE III, individually and as general partner thereof; and APRIL A. BIGLER, an individual.

Oct. 8, 2009 (Fremont County District Court).

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