Tag Archives: predatory lending

Philadelphia sues Wells Fargo over discriminatory lending

Bad news for Wells Fargo…

Housingwire:

The city of Philadelphia announced Monday that it is suing Wells Fargo for alleged discriminatory lending practices against minority borrowers.

Philadelphia’s announcement specifically cites the recent Supreme Court decision, which stemmed from a lawsuit brought by city of Miami against Bank of AmericaCitigroup, and Wells Fargo in 2013.

In its lawsuit, Miami claimed that the banks engaged in predatory lending to minority borrowers in the city, and accused the lenders of “reverse redlining,” which led to a large number of foreclosures, lower property tax collections, and increased cost to the city to deal with the resulting property value loss and blight.

The Supreme Court ruling granted cities the right to sue banks under the Fair Housing Act, but established that the city must prove direct harm to itself caused by the lender’s actions.

Philadelphia is taking that challenge head-on.

According to the city’s announcement, its complaint alleges that beginning in 2004 through today, Wells Fargo violated the FHA by “steering African-American and Latino borrowers towards high-cost or high-risk loans even where those borrowers’ credit permitted them to obtain more advantageous loans.”

Philadelphia’s complaint also alleges that Wells Fargo was “aware and, in fact, incentivized the marketing of the high-cost or high-risk loans to minorities.”

According to the city, the incentivized loans included “lender credit” loans, in which Wells Fargo pays the borrower’s closing costs in exchange for receiving a loan with a higher interest rate.

HSBC: Protected by DOJ and UK Chancellor, and blew the whistle on Spitzer’s prosecution scandal

ValueWalk:

The report claims:
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The UK’s Financial Services Authority “hampered” an official investigation into money laundering allegations against banking giant HSBC and UK Chancellor George Osborne sought to influence the inquiry to prevent prosecution. US officials claimed that they were concerned it might cause a global financial disaster – but this is not believable.

Kindergarten level logic shows that between the two extreme positions – doing next to nothing (what happened) and closing the bank down – there were millions of alternatives which would give a measure of justice while protecting the legitimate financial system.

Despite its overwhelming criminality, HSBC had the gall to have New York Attorney General Eliot Spitzer forced out of office after it reported three transactions totalling $10,000 in 2007. Spitzer had prosecuted many criminal banks. HSBC’s criminal Statement of Facts states :

….. HSBC Bank USA processed over 100 million wire transfers totaling over $300 trillion. Over two-thirds of these transactions involved customers in standard or medium risk countries. Therefore, in this four-year period alone, over $200 trillion in wire transfers were not reviewed ….

How and why did HSBC isolate 3 small transactions by a criminal bank opponent – when it had established a system which ignored 67 million others totalling over $200 trillion? The logical explanation is that there was some type of tip-off or trade-off.

HSBC’s 2012 settlement detailed how Mexico’s Sinaloa drug cartel and Colombia’s Norte del Valle cartel laundered $881m through HSBC and a Mexican unit, and how the bank violated US sanction laws by doing business with customers in Iran, Libya, Sudan, Burma and Cuba.

On a a side note: HSBC, J.P. Morgan Chase and Wells Fargo filed a lawsuit to stop then NY Attorney General Eliot Spitzer from looking at lending data in 2005.  Spitzer subpoenaed the banks to obtained data about their then predatory mortgage lending practices to low-income borrowers.

Groundbreaking ruling? Federal jury finds Emigrant Bank liable for predatory lending

Another predatory lending lawsuit…

In what the plaintiffs’ attorneys are calling a “first of its kind” decision, a federal jury in Brooklyn ruled this week that Emigrant Savings Bank and Emigrant Mortgage Company engaged in predatory lending by “aggressively marketing toxic mortgages to Black and Latino homeowners with poor credit” in the run-up to the housing crisis.

According to Legal Services NYC, which represented several aggrieved homeowners in the case, a federal jury found that Emigrant Bank violated the Fair Housing Act, Equal Credit Opportunity Act, and New York City Human Rights Law.

The decision is the first jury verdict finding a bank liable for targeting grossly unfavorable and predatory financial products to African-American and Hispanic communities, a practice known as reverse redlining, Legal Services NYC said in a release.

The plaintiffs’ attorneys also said that this is the “first case where a jury had the opportunity to hold a bank accountable for predatory practices that contributed to the financial crisis in 2008.”

According to Legal Services NYC, the jury awarded six plaintiffs a combined $950,000 in damages.

Read on.

Supreme Court to consider Miami’s predatory lending suit against Bank of America, Wells Fargo

The U.S. Supreme Court announced Tuesday that it will hear arguments during its next term on whether the city of Miami can sue Bank of America and Wells Fargo for alleged predatory lending.

According to Reuters and ScotusBlog, the Supreme Court granted a writ of certiorari to the banks, meaning it will consider the city’s lawsuits against Bank of America and Wells Fargo during its next term, which begins in October and ends in June 2017.

The Supreme Court will not rule on the merits of the lawsuits, but rather whether the city of Miami is allowed to bring the lawsuits, which accuse the megabanks of engaging in long-term mortgage lending discrimination in the city.

Read on.

New Payday-Loan Rules Won’t Stop Predatory Lenders

A BORROWER TAKING OUT a $500 loan could still pay over 300 percent in annual interest, despite new rules designed to crack down on predatory small-dollar lending out Thursday from the Consumer Financial Protection Bureau (CFPB).

The proposed consumer protections for payday loans, auto title loans, and high-cost installment loans focus on making the lenders document borrowers’ incomes and expenses to confirm that they have the ability to make their payments and still maintain basic living expenses. Payday lenders currently do minimal financial checks before issuing loans.

That could prevent deceptive practices. But actually enforcing underwriting standards is more difficult than enforcing specific product safety rules.

One more enforceable provision, limiting monthly payments on some loans to no more than 5 percent of a borrower’s paycheck, was considered by the CFPB but rejected.

Read on.

High Court Asks Administration to Weigh in on Predatory Lending Case

A Supreme Court order this week forces the Obama Administration to make a decision: either save consumers tens of billions of dollars at the expense of debt collectors, car loan specialists, and student lenders, or defend those financial entities.

In a one-line order, the justices on Monday asked Solicitor General Donald Verrilli, the legal representative for the federal government in Supreme Court matters, to file a brief in the case of Madden v. Midland Funding, “expressing the views of the United States.”

In Madden, a class-action case, borrowers argued that loans sold by a bank to a debt collector should be subject to the usury law in New York state, which limits the interest rate that can be charged. The 2nd Circuit Court of Appealsagreed, and Midland Funding appealed to the Supreme Court. Legal experts are following the case closely, since it could, after nearly 40 years, herald a return to prominence for state-based usury laws, a key safeguard against predatory lending.

“Does the White House stand for consumer protection, or will it support Wall Street when no one is looking?” asked Adam Levitin, a law professor at Georgetown University. Levitin, a pioneer of the argument that state usury laws apply to non-banks, believes the White House’s views will likely determine whether the Supreme Court takes the case.

Read on.

Manager of ‘predatory’ loan modification law firm sent to jail

A San Diego businessman will spend the next nine months in prison after being convicted for his role in a fraudulent mortgage loan modification business that presented itself as a “law firm” in order to con more than 1,000 struggling homeowners out of more than $3 million total.

According to a release from the U.S. Attorney’s Office for the Southern District of California, Michael Nazarinia worked as the manager of a “predatory loan modification law firm,” which promised loan modifications in exchange for money but did not deliver on its promises.

The U.S. Attorney’s Office said that Nazarinia worked as the manager of “Haffar & Associates,” which was owned by figurehead attorney Mohamed Haffar, and recruited new customers using telemarketers who lied to clients in order to induce more than 1,000 people to sign up to pay more than $3.5 million in total.

According to the release, Nazarinia supervised Haffar & Associates “case managers,” who submitted loan modification applications and negotiated with the banks on behalf of clients.

Read on.

Foreclosure activists fight to halt law

A new state law may make it nearly impossible for victims of wrongful foreclosures to regain their homes.

If enacted, An Act Clearing Titles to Foreclosed Properties would drastically reduce the time that victims have to sue to get their property back. It would drop from 20 years down to one or three years, depending on when the foreclosure occurred.

The Massachusetts Alliance Against Predatory Lending — an organization that seeks to delay the law’s implementation — held a meeting at Tent City last week, where attendees shared stories and spoke out against the law. The new deadlines provide far too little time to ready oneself to sue, attendees said.

And once that timeframe is up, the law would essentially make erroneous foreclosures valid, said City Councilor Tito Jackson, who spoke with the Banner by phone.

“Improper procedure carried about by banks [would be] able to be made permanent without actually a court process that determines whether right or wrong has been done in these cases,” Jackson said.

Read on.

Lawmakers protect title loan firms while borrowers pay sky-high interest rates

Dec. 9, 2015: This story has been updated.

After years of financial ups and downs, Gloria Whitaker needed some quick cash to help keep a roof over her head.

So she and her son, Devon, went to a TitleBucks store in Las Vegas and took out a $2,000 loan, pledging his gold 2002 Ford F-150 truck as collateral.

Whitaker, 66, said nobody verified she, or her jobless son, could repay the loan, which carried interest of 121.545 percent. When she paid off the loan, she said, the company didn’t give back the title to the truck. Instead, employees talked her into borrowing $2,000 more, which plunged the family deeper into debt, she said. Whitaker knows that was a mistake, but also feels misled by aggressive — and legally dubious — lending tactics.

“I had a hardship,” Whitaker said. “I was between a rock and a hard place.”

In October, Whitaker filed a complaint with state regulators, who say the giant lender, TitleMax, which operates TitleBucks, violated state lending laws and estimate that it overcharged Nevada customers more than 6,000 times this year by nearly $8 million.

“Our position is that they are a bad actor,” said George Burns, who heads the Nevada Financial Institutions Division. “We believe it is very important that we get them under control. We want them to conduct their business legally and not be taking advantage of the public.”

It’s legal in about half the states to pledge a car title as collateral for short-term loans of a few hundred dollars or more. Many of these states allow lenders to tack on interest that can top 300 percent, and to seize and sell off cars when borrowers fail to pay. Most states have either permitted the companies to operate for years, or kept them out with usury laws that cap interest rates.

Title lenders insist they provide a vital financial service to people who can’t take out a bank loan or get credit when they need fast cash.

Consumer advocates scoff at this notion. They argue title lenders prey on low-income people by putting their cars, often their biggest or sole asset, at risk. Title lenders in four states alone — New Mexico, Missouri, Tennessee and Virginia — repossessed at least 92,000 cars in the past two years, according to state records.

“The person who has paid off their car is starting to move up the ladder a little bit,” said Jay Speer, executive director of the Virginia Poverty Law Center in Richmond. Virginia is home to nearly 500 title-lending shops.

Read on.

CFPB Wins Default Judgment Against Corinthian Colleges for Engaging in a Predatory Lending Scheme

Court Rules that Corinthian Engaged in Deceptive Lending Practices and Illegal Debt Collection Practices

WASHINGTON, D.C. — Yesterday, at the request of the Consumer Financial Protection Bureau (CFPB), a federal court entered a final default judgment against Corinthian Colleges, Inc., resolving a lawsuit filed by the CFPB in September 2014. The Bureau’s lawsuit against Corinthian alleged that the company lured tens of thousands of students into taking out private loans to cover expensive tuition costs by advertising bogus job prospects and career services. Corinthian then used illegal debt collection tactics to strong-arm students into paying back those loans while still in school. The court ordered that Corinthian was liable for more than $530 million and prohibited the company from engaging in future misconduct.

Read on.