LOS ANGELES, CALIF.--A Los Angeles Superior Court judge certified a lending discrimination class action against Wells Fargo Bank. The class action was brought against the lender on behalf of loan customers in minority communities in Los Angeles. Judge Anthony J. Mohr cited The Unruh Civil Rights Act when certifying the class. The Unruh Act makes it illegal to deny, aid or incite a denial, or make any discrimination or distinction on the basis of, among other things, race, color or national origin. This includes the failure or refusal to provide all persons with full and equal advantages and services in all business establishments. (Opal Jones, et. al v. Wells Fargo Bank, N.A., Wells Fargo Home Mortgage, et. al Los Angeles Superior Court, Case No. BC337821).
The suit charges that Wells Fargo consistently and knowingly discriminated against borrowers in minority neighborhoods, resulting in these borrowers paying more for their loans than borrowers in other parts of Los Angeles County. According to the class action filing, Wells Fargo introduced a computer program in 2002 called "Loan Economics" which gave loan officers the ability to offer discounts to loan applicants that lowered overall loan costs through reduced fees and interest rates.
"Well Fargo allowed some bank branches to use the Program to price loans, and at the same time prevented other bank branches from doing so. The branches that were prevented from using the Program were in predominately minority communities. Those branches that could use the program were in predominately white communities," says attorney A. Barry Cappello, managing partner of the Santa Barbara law firm of Cappello & Noël, which is representing the class.
"Through discovery, we learned that the cost of a Wells Fargo home loan was predicated in part on where the bank branch was located," says attorney Leila J. Noël, also a partner at Cappello & Noël. "Wells Fargo loan officers in minority communities asked to use the Loan Economics Program because they knew they then could pass discounts on to their customers, but they repeatedly were rebuffed by upper management. We believe thousands of minority Wells Fargo borrowers unwittingly were put into higher-cost loans because of the lender's discriminatory practices," says Noël.
As representatives of the class, the plaintiffs are seeking statutory damages in the amount of $4,000 per loan. Class members must wave their right to actual damages. “We still are awaiting additional information from Wells Fargo, but we estimate that more than 10,000 borrowers will qualify as class members,” says Cappello, a pioneer in "lender liability" law whose firm regularly represents borrowers against their lenders.
Class members are defined as borrowers who obtained a first trust deed-secured loan from Wells Fargo Bank or Wells Fargo Home Mortgage for more than $150,000 between May 2002 and December 2005. Members must have applied for their loans at Wells Fargo branches located within specific areas of Los Angeles County.
"A class action is the appropriate means to bring this type of discriminatory practice to light," says Cappello. "The majority of class members are not even aware that they paid or continue to pay extra for their home loans. And they never would have known if it weren't for conscientious former Wells Fargo employees who decided to speak out."
Notice to potential class members will be forthcoming upon approval of the form of notice by the court.