Conservatives would have you believe that the entire housing bust and ensuing economic collapse was the fault of GSE lenders, Freddie and Fannie, loaning to "risky" customers, "those" people who just shouldn't be homeowners, rather than the banks who were preying on customers they knew all along would be potential default risks.
According to Huffington Post's Shahien Nasiripour, one of those predatory lenders is finally in a legal hotseat over the practice of "reverse redlining."
WASHINGTON -- The Department of Justice is preparing a lawsuit against Wells Fargo, the nation's largest home mortgage lender, for allegedly preying upon African American borrowers during the housing bubble and steering them into high-cost subprime loans, according to three people with direct knowledge of the probe.
The company, the fourth-largest U.S. bank by assets, is currently embroiled in pre-lawsuit negotiations with the Justice Department in hopes it will settle the accusations and avoid a public lawsuit, these people said.
The allegations mirror those in public actions taken by the Federal Reserve and a separate lawsuit filed by the city of Baltimore.[...]
In its ongoing case against Baltimore, Wells Fargo stands accused of using those same practices, but deploying them against black borrowers in majority-black neighborhoods, an act commonly known as "reverse redlining." The city alleges that the bank targeted black borrowers, knowing they'd ultimately default on their loans, but did not fear shouldering the cost because Wells sold those loans to investors. Wells Fargo denies the allegations.[...]
The previously-undisclosed Justice probe, which is being led by the Civil Rights division's Fair Lending Unit, lends credence to the city's lawsuit, sources told The Huffington Post.
This would be the definition of predatory lending, a bank knowingly targeting borrowers who won't be able to pay, then selling the mortgages to minimize its own risk. If it happened at Wells Fargo, which as Nasiripour points has been considered among the good guys in this whole bankster mess, then you know it happened throughout the industry. This probe is good news, but needs to be expanded, and some banksters need to go to prison.