Wells Fargo gave wealthy blacks subprime loans more often than poorer whites

 In 2007, nearly 25 percent of Wells Fargo’s highest-earning 259 black borrowers in the Baltimore metropolitan area, who all reported earnings of $120,000 or more, received high-cost mortgages from the lender. About 15 percent of Wells Fargo’s 259 lowest-earning white borrowers in metropolitan Baltimore, who all reported earnings of less than $40,000, got subprime loans from the lender.

In metropolitan Chicago, about 34 percent of African Americans earning $120,000 or more received high-cost, subprime loans from Wells Fargo in 2007. Less than 22 percent of white borrowers earning less than $40,000 got high-cost loans from the lender.

Download an Excel spreadsheet with a racial breakdown of Wells Fargo’s high-cost lending by income categories in the Baltimore and Chicago metro areas.

Wells Fargo is not the only lender giving high-cost loans more often to its highest-earning black customers. Nationwide, African Americans earning more than $300,000 were more likely to get high-cost loans than Asian, Latino and white borrowers earning less than $40,000, according to a Reporter analysis last November.

While income may not accurately reflect credit worthiness, fair lending advocates often point to the racial disparities between wealthy blacks and lower-income individuals of other races and ethnicities as red flags.

In its lawsuit against Wells Fargo, the City of Baltimore accuses the lender of offering high-cost loans to African Americans who could have qualified for better terms.

Chicago and several other metropolitan areas could raise similar questions based on The Chicago Reporter’s analysis of Wells Fargo mortgages in more than 350 metropolitan areas across the country.

As required by the Home Mortgage Disclosure Act, lending institutions provide information from millions of mortgage loan applications to the federal government each year including details about the loan and the borrower. High-cost mortgages are first-lien loans carrying interest rates at least three percentage points above the rate of comparable-maturity U.S. Treasury securities at the time the loan application was made. For second-lien loans, high-cost loans are those at least five percentage points above the U.S. Treasury standard.

Higher-interest rates mean higher mortgage payments—sometimes hundreds of dollars more each month. Many fair lending advocates and economists argue that the subprime lending boom accelerated the country’s slide into its current financial crisis.