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New developments in our lawsuit against Wells Fargo.

April 7, 2010

Today at City Hall, we are announcing the filing of an amended complaint in the federal lawsuit against Wells Fargo for unfair and unscrupulous mortgage lending practices in Memphis and Shelby County.

The amended complaint adds important new information revealed by the City and County’s investigation:

First, the amended complaint highlights the testimony of four former Wells Fargo employees who worked in Memphis. In sworn statements, they describe how the company targeted African Americans for predatory, deceptive, sub prime loans; deliberately added expensive and unnecessary loan terms to increase the profit for Wells Fargo; looked for minority borrowers with expensive existing consumer loans and consolidated this debt with new debt, securing it against the borrowers’ homes, thus placing the house at risk where it had not been at risk before; and deceived borrowers by concealing terms and falsifying documents.

Second, the amended complaint documents the property-by-property damages the City and County have incurred as a result of the unnecessary foreclosures in African-American neighborhoods. Foreclosures lead to code violations that cost the City and County money.  Many foreclosed properties become vacant.  Vacant properties also result in code violations that cost the City and County money.

The amended complaint sets out the types of costs, such as police and fire calls to the properties, as well as services the City and County have had to provide, like boarding, cleaning, structural repairs, and demolition.

Finally, the amended complaint adds new claims under the Tennessee Consumer Protection Act based on the testimony of former Memphis Wells Fargo employees who describe the deceptive practices that have been targeted at African-American neighborhoods and borrowers.  A copy of the amended complaint has been provided to Attorney General Cooper and that office is currently reviewing the matter.

This new evidence confirms everything we feared about what Wells Fargo has done to our city.  We are more determined than ever to see that these deceptive and unscrupulous lending practices that have damaged our families and neighborhoods are addressed.  All who have a stake in ensuring our city and county survive the current foreclosure crisis, including our state government and federal regulators, have an obligation to rally around this lawsuit and see to it that Wells Fargo does the right thing.

The City of Memphis and Shelby County Government are represented by Washington-based law firm Relman, Dane & Colfax PLLC and Memphis based firm Brewer & Barlow PLC.

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