By Candice Ludlow
http://stream.publicbroadcasting.net/production/mp3/wkno/local-wkno-878104.mp3
Memphis, TN – Foreclosures continue to mount this year - but not all are due to the economic crisis. The city of Memphis and Shelby County filed suit against Wells Fargo today alleging reverse redlining by the bank. Or - targeting African American neighborhoods with sub-prime loans.
The mayors of Shelby County and the City of Memphis gathered with attorneys at the Civil Rights Museum to announce that they've filed a predatory lending lawsuit this morning in federal court under the Fair Housing Act.
John Relman is one of the top housing attorneys in the country.
"And when we see a foreclosure rate that is 8 times greater in the minority community than in the white community, we know something is terribly wrong. We know that they know how to do this. And yet they're getting it wrong at a much greater rate in the black community than in the white community, and we say, why is that?'" Relman said.
Relman believes that the reverse redlining is a systematic business practice of Wells Fargo.
"And the details of exactly how they did that is laid out by two employees, Elizabeth Jacobson and Tony Paschal, who describe how they targeted minority communities for these loans, black communities. They targeted the zip codes. They targeted African American churches. This is the community that has been traditionally denied loans, good loans and was vulnerable to these practices. At the same time, they describe how they'd steer people for financial profit into the more expensive loans because they could make more money," Relman said.
Wells Fargo denies all charges. In a written statement they say, "While we have not had an opportunity to review the specifics of the suit, the allegations referenced in earlier news reports about Wells Fargo's lending practices are baseless and inaccurate.
Relman and Webb Brewer, another attorney on the case, are asking for injunctive relief. That is for Wells Fargo to stop its practice of reverse redlining. They are also seeking monetary damages to clean up and stabilize neighborhoods that are on the brink of destruction from vacancies, crime and blight caused by the rash of foreclosures. But that's not all. Brewer says he and Mayor AC Wharton also want the court to step in and review every Wells Fargo foreclosure inside the courthouse like Pennsylvania does. Currently, houses are auctioned on the courthouse steps, outside the jurisdiction of the court.
"And we are very intent on trying to get broad relief for people facing foreclosure. You know, there's 13,000 foreclosures that have been initiated in 2009. And that's I think the primary concern of all of us is to trying to do something to put a tourniquet on that you know hemorrhage of foreclosures that we're having," Brewer said.
But Wells Fargo is just one of the sub-prime lenders in the area.
We have sued Wells Fargo because they are one of the worst lenders in our community in terms of causing the kinds of damages that both mayors have spoken to. But we certainly know that they're not the only ones, there have been many, many sub-prime lenders that have been active in this community. No one should take the fact that we have filed suit against Wells Fargo as an indication that we're not interested in others. But we do hope that other sub-prime lenders take note about what's happened here today. We will be watching closely to see how they respond to this filing and the concerns we have about the future of our community and the role that they've played, causing a lot of our problems.