Dive Brief:

• A group of current and former Wells Fargo employees sued the bank last week, alleging it discriminated against bilingual Hispanic mortgage sales team members and Hispanic customers in a predatory lending scheme, Bloomberg reported Thursday.
• The bilingual consultants were directed to steer Spanish-speaking customers away from home equity lines of credit into costlier and more profitable refinancing options without any associated disclosures, according to the complaint.
• Plaintiffs have not specified the monetary damages they are seeking.

Dive Insight:

Wells Fargo told its bilingual sales consultants to direct customers toward the more expensive lending options without disclosing the costs involved, partly by declining to give customers written materials in Spanish, plaintiffs said in the complaint, labeling the move “predatory.”

“Customers sometimes call into the bilingual team months after closing a refinance cash out, surprised to discover they have been charged substantial closing costs,” according to the complaint, seen by Bloomberg. “Nevertheless, management instructs the bilingual team, ‘Don’t mention cash out.’” 

The complaint was filed as a proposed class action on behalf of more than 20 Spanish-speaking mortgage sales consultants who were “of Hispanic ethnicity or from Mexico or other Central and South American countries,” Bloomberg reported.

Tom Goyda, Wells Fargo’s senior vice president for consumer-lending communications, said the suit’s claims “misrepresent the conversations our home mortgage consultants are having with our customers to best meet their mortgage needs.”

“Higher costs related to cash-out conforming refinances compared with rate-term refinances are tied primarily to pricing driven by the Government Sponsored Enterprises, which we don’t control,” Goyda said in an emailed statement Monday. “We look forward to presenting the facts of this situation, which reflect Wells Fargo's significant and long-term commitment to diversity, equity and inclusion.”

The new allegations add to Wells’ fairly dodgy track record in mortgage lending. A Bloomberg analysis of federal mortgage data last year found the bank approved 47% of refinance applications from Black homeowners in 2020 but 72% from white borrowers. Wells narrowed that gap slightly in 2021, accepting 58% of refinancing applications from Black homeowners, compared with 79% for white borrowers.

Lawyers for Wells Fargo and the borrowers told a judge this month that they will work with a mediation service to resolve lawsuits alleging discrimination against Black homeowners, according to Bloomberg.

In the most recent complaint, the Hispanic former employees also alleged Wells did not let the bilingual team join a pilot program that guaranteed commission to English-speaking mortgage consultants irrespective of their actual sales.