Despite settlement, Wells Fargo still in housing activists' crosshairs

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Wells Fargo was one of 10 banks to sign a settlement after facing claims of abusive practices.
photo by Nathan Jongewaard via Creative Commons

Federal regulators cut a deal with 10 major banks to “speed up housing relief,” major news outlets reported earlier this week – but to exactly no one’s surprise, the amount promised to struggling homeowners is a pittance compared with the overwhelming losses sustained during the foreclosure crisis. National consumer advocates criticized the deal as a lost opportunity to demand some accountability from Wall Street. In San Francisco, neighborhood activists with Occupy Bernal dismissed the agreement as falling short and vowed to continue campaigning against Wells Fargo, a primary mortgage lender based in San Francisco and one of the 10 financial institutions to sign on. 

The bank settlement replaced a mandatory, independent foreclosure review process that financial institutions were required to take on following revelations of widespread abuses, like robo-signing. Created to benefit homeowners who faced foreclosure in the wake of these shady lending practices, the program was ultimately chalked up as a failure for being too slow, costly and ineffective. Not only did it reach just a tiny fraction of those eligible to file claims, said Bruce Mirken of the Greenlining Institute, but “as of the end of the year, nobody had actually gotten any money.”

Instead of continuing down that fraught path, big lenders such as Bank of America, Wells Fargo, JPMorgan Chase and others agreed to shell out $8.5 billion to settle the claims. Under a process that remains far from clear, payments are supposed to be distributed among 3.8 million struggling households nationwide – some of whom went through foreclosure in 2009 and 2010, and others currently in danger of losing their homes.

Local housing activists were cynical. “Wells Fargo and the other big banks have agreed to paying principal reductions and affordable permanent loan modifications about 20 times. They haven’t done it yet, and they’re not going to do it unless we make 'em,” said Buck Bagot, a neighborhood activist who has been organizing around foreclosure issues with Occupy Bernal. In San Francisco alone, more than 1,200 foreclosed properties turned up in a quick search on Trulia.com – many listed at prices exceeding $500,000.

The situation is far worse in the East Bay. From 2006 to 2011, one out of every 14 Oakland households faced foreclosure and had their property reverted back to the bank, according to data compiled by the Urban Strategies Council, an Oakland-based nonprofit working on anti-poverty issues. East Oakland was hit hardest, with data visualizations showing between 165 and 409 properties per census tract that had reverted back to lenders in 2008. (You can view detailed geographic foreclosure data compiled by the Council here.)

“The amount of wealth that has been sucked out of communities is astonishing,” said Mirken, of the Greenlining Institute, a Berkeley-based research advocacy organization focused on economic justice. “It’s not at all clear that the $8.5 billion is at all in relation to the trillions in wealth that was drained from communities in the foreclosure crisis.” In California there are currently 208,435 foreclosed homes up for sale, according to data recently accessed on housing tracking site RealtyTrac, with average price listings of around $273,000. The amount that stands to be gained by selling off bank-owned properties exceeds the total settlement payout by many orders of magnitude. 

Mirken said he was glad the banks are promising at least some form of relief to struggling homeowners, even if it's small potatoes. “I’m not dismissing this as nothing,” he said. “But it feels like the response has never matched the scale of the problem.”

Meanwhile, some nationwide consumer advocates blasted the deal. “The capped pool of cash payments is wholly inadequate in light of the scale of the harm,” said Alys Cohen, staff attorney for the National Consumer Law Center. “If the reviews had been done right the first time, banks would have been on the hook to pay far more to homeowners, even though the planned scheme fell far short of full compensation.”

Occupy Bernal staged a protest at the Bayview branch of Wells Fargo several weeks ago in an effort to draw attention to abusive lending practices that disproportionately affected African American, Asian and Latino homeowners. Bagot told the Guardian there are more to come. As for the bank settlement deal, he scoffed: “These governmental chickens live in the chicken coop that’s run by the fox.”

Comments

other major banks. They retained most of their mortgages rather than securitize them, and they had stricter requirements for borrowers, meaning that they suffered fewer defaults.

In fact, the only reason they got sucked into this mess was because of the shotgun marriage they were effectively forced into by the government, buying the hopelessly indebted Wachovia Bank, which would otherwise have collapsed.

So Wells suffered not for it's own activities but because it destroyed it's own fiscal strength to bail out Wachovia.

Bank of America or CitiBank are much more viable targets for anger than Wells.

Posted by Guest on Jan. 10, 2013 @ 9:00 am

Anybody know who handles WF's public perception management?

Posted by Guest on Jan. 11, 2013 @ 9:24 am

prudently and conservatively. The problem was that they bought Wachovia, who didn't. Most of the bad loans that Wells Have are ex Golden West loans:

http://money.cnn.com/2008/02/18/news/companies/yang_wachovia.fortune/ind...

Posted by anon on Jan. 11, 2013 @ 10:52 am

It's all very simple. The lying reactionary twits come on this forum and try to be disturbing; i.e. "government shotgun wedding."

No. The only thing "shot gun" is the scattershot BS from the right here.

They turn a familiar phrase on its head: If it's too bad to be true, don't worry; it damn well isn't.

http://www.sfgate.com/business/article/Federal-regulators-expedite-Wells...

These apologists and explainers for the banking sector are truly a vile and reprehensible lot.

Wachovia did hundreds of billions of dollars worth of money laundering for the Mexican drug cartels before tripping on its own dick with mortgage fraud but has anybody ever spent a *single* day in jail?

No.

Do the "law and order" types here lament our weak-on-crime white collar prosecution rate in this country?

No.

It's only when those with colored skin get around cocaine that the law needs to step in according to these cretins.

Posted by lillipublicans on Jan. 11, 2013 @ 12:17 pm

What I said was that Wells was better than most, so it's odd that "activists" would focus on that one.

Posted by anon on Jan. 11, 2013 @ 12:49 pm

Wells is in a lot more trouble for the dirty tactics they used after everyone got in trouble. I've modified a few loans for people on the side and Wells Fargo is by far one of the worst.

Posted by Guest on Jan. 17, 2013 @ 10:36 am

that they are decent and flexible. They are perfectly entitled to stand firm on the terms of the original loan and repossess as necessary.

But you will no doubt know of course that the bad loans were mostly from Wachovia and derived originally from Golden West. So the underwriting decisions were not made by Wells and servicing decisions are a different kettle of fish, and really just making the best of a bad situation.

Posted by anon on Jan. 17, 2013 @ 11:30 am

Debts that cannot be paid will not be paid.

Posted by marcos on Jan. 17, 2013 @ 11:57 am

It doesn't show decency and flexibility as someone current on an underwater Wells Fargo Mortgage i will wager that the loans modified were not and that without a modification they would have lost a lot more money than if they hadn't. Decency would require that they be willing to work with those of us with good credit, who pay our bills and had the misfortune of buying our homes in an inflated home market that regardless of how you feel about Wells Fargo intent they certainly benefited significantly from the aftermath.

Posted by Guest on Mar. 22, 2013 @ 7:50 am

Here's another idea. Pay your debts, rather than looking to get out of them on a technicality.

Posted by Guest on Mar. 22, 2013 @ 9:32 am

part of the total losses incurred by the subprime debacle, there is a sense in which that is fair because the mortgage banks were only one of many culpable for the problems.

You can equally blame mortgage brokers, appraisers, ratings agencies, fannie mae and freddie mac, investment banks that securitized the loans and/or created derivatives from them, investors across the globe who demanded more and more yield and ignored risk, regulators, politicians and - perhaps most of all - borrowers who didn't read the small print of their loan or perform due diligence on their commitment.

Spreading the pain and the cost across all these participants is the fairest thing to do.

Posted by anonymous on Jan. 10, 2013 @ 9:04 am

COPY OF LOUSY $125 CHECK FROM BANK SHARKS POSTED ON -

www.HurtingHomeOwners.com

www.Twitter.com/HurtinHomeOwner (This is the correct spelling)

Posted by HurtingHomeOwner on Jan. 11, 2013 @ 9:00 am

I disagree with most comments here. I purchased my home in 1999 & paid my mortgage on time for10 years before I missed a payment due to my company closing its doors in February 2009. I got a vanilla conventional mortgage on a house that was extremely modest. My mistake was listening to the morans at WF who told me that help was available through many alternative options, but I had to be 60 days late to be considered. Then when I lost my job, and became 60 days late they said oh u can only get a mod AFTER u do a trial payment plan-but they said I must have income (a job) to 'qualify' for the pmt plan. 4 mos later I get a job. Now I'm 6 mos. behind. Go through 2 pmt plans send in my docs as required. Takes WF 7 more months to review my file. By then I'm making more $$ than before & then WF tells me "u make too much $$" to get a mod. But offer me a shit stinking refi deal of a 40 year note! Now I'm 9 mos behind in dire straights to get caught up & they offer me a 40 year loan - did NOT lower my interest rate-to save me $40 /mo. It was a sweet deal for the investor b/c it added an add'l 20 years to loan & over 250k in interest over the life of the loan...this is the issue...they said there was help ..contingent upon me being in default, went into default, it snowballed, the help they promised never happened...but by the time I figured it out it was too late to dig myself out. Say what u will but they literally stole my house from me & for that they should pay and pay dearly. I will not settle for one penny less than maximum!

Posted by Guest on Jan. 16, 2013 @ 10:27 pm

If you have mortgage problems with Wells Fargo then contact the OCC (Office of the comtroller of currency) via the OCC website. File your claim online in there txt complaint box and submit it. Wells Fargo will call you and be very willing to work with you once you do this. You do however have to still complete the steps of any programs you enter. They will play fair though this time.

Posted by Guest on Jan. 17, 2013 @ 10:42 am

Paying off debts is easier said than done and not everyone who defaults on their loans is being honest about their ability or inability to do so. It’s impossible for banks to scrutinize every person in order to weed out the goodies from the baddies. Unfortunately, it’s the good guys that get the short end of the stick in this case. Seems these loaners have the upper hand when finding loopholes in order to punish those who have been consistent with their payments.

Posted by Spot Thedog on Sep. 12, 2013 @ 12:11 am