Former Loan Officers
Allegations from Former Loan Officers referenced in the City of Miami case complaints
Bank of America (includes allegations from former bank employees who worked at Bank of America between 2005-2010, and 2011-2013)
- Bank of America targeted less savvy minority borrowers for loans with more onerous terms.
- Bank of America paid its employees more for steering minorities into predatory loans.
- Bank of America did not properly underwrite a variety of more expensive and riskier loans made to minorities.
- Bank of America refused to refinance many types of teaser loans that were previously issued to minority borrowers.
Wells Fargo (includes allegations from former bank employees who worked at Wells Fargo between 2000-2012)
- Management pushed FHA and Freddie Mac loans on borrowers in predominantly minority neighborhoods even though these loans were more expensive than other loan products. The loan officer told bank management he wanted to inform these borrowers there were better loan products and was not in the industry to place borrowers into bad loans. Bank management disagreed and responded that “it’s about putting food on the table at your home for your family.”
- Wells targeted minority churches and their congregations to sell minority borrowers more expensive loans. Wells even assigned employees to make presentations at churches on the basis of race, and during a conference call with management, loan officers were told that only employees of color could attend. Wells did not target white churches.
- Wells targeted minority borrowers at a variety of additional special events, and employees were selected to make presentations on the basis of race. A former bank employee was told that she was “too white” to appear before the audience, and her complaints to management were ignored.
- Wells’ compensation structure incentivized employees to refer loans to loan officers responsible for selling more expensive loans even though some of these borrowers qualified for less expensive prime loans.
- Wells misled borrowers regarding the terms of certain types of more expensive loans.
- Wells limited the ability of minority borrowers to refinance out of more expensive/riskier they received from the bank. According to a former employee, “I always said that a Rodriguez in the last name was treated differently than a Smith. In two applications with similar scenarios, “the one with Smith would get it and the one with Rodriguez didn’t.”
- Wells often changed paperwork documenting which branches were originating loans in order to demonstrate that no single branch was solely originating loans from a single ethnic community. According to the former employee, “it was common knowledge that to avoid problems, loans from one office were sent to another office to make both look more balanced. We needed to put some white loans in that community and some black loans in this community because [otherwise] we’ll get some sh#% from the Fed.”
- Wells took advantage of low to middle income Hispanic borrowers who were not well-educated and were easily misled about mortgages.
JP Morgan (includes allegations from former bank employees who worked at JP Morgan between 1995-2010)
- JP Morgan qualified minority borrowers for the issuance of loans by pooling together the cash flows for multiple family members who would sign the deed. This procedure resulted in the issuance of loans to minorities, particularly Hispanic borrowers, that resulted in “a rash of foreclosures.”
- JP Morgan knew that because immigrant minority borrowers were undereducated and financially naïve, they were an easy target and it was easy to coerce or convince them to take out loans. According to the loan officer, you talk them into it, you convince them, and these borrowers would take your advice because you are from a bank. These are blue collar workers who treated advice from a loan officer similarly to that of a doctor.
- JP Morgan managers told employees that if you can talk customers into buying a home the bank will be successful.
- JP Morgan managers knew there was a lot of fraud involving the issuance of mortgage loans in Miami.
- JP Morgan set guidelines that were lenient and minority borrowers qualified for loans they could not afford.
- Higher-level bank employees must have known what was going on, but many of the regional managers received large commissioned salaries based on the amount of loans sold in their regions. Their incentive was to sell as many loans as possible.
- JP Morgan loan officers talked many borrowers, including minorities, into talking out home equity lines of credit and other loans that the borrowers did not understand because they were more interested in meeting sales goals.
- JP Morgan managers told loan officers “a bunch of times” to tweak the bank’s automated software system (Desktop Underwriting) to obtain loan approval for borrowers and submit false information.
- JP Morgan created such intense pressure to close loans that it created an environment where employees were more concerned about hitting their numbers than they were about whether the mortgages were good. Managers also felt the pressure and were threatened if they did not have “the numbers on the board.”
- In 2009 and thereafter, JP Morgan “went from one extreme to the other.” The Bank’s guidelines for qualification became so stringent that it seemed no one could refinance a loan, driving some customers towards foreclosure, which disproportionately impacted Hispanics.