When I got to the part about Wells Fargo in “Broken Bargain,” Kathleen Day’s excellent book on American financial institutions and the disasters they have wrought, I had to ask: “How is this company still in business?”
The country’s fourth-largest bank and its various entities engaged in a series of sleazy practices that, since 2016, have led to more than $4 billion in fines and settlements, and its history in Baltimore is not pretty: In 2012, Wells Fargo agreed to pay $175 million to settle accusations of discriminatory lending practices related to the housing crisis. City and federal officials and housing advocates alleged that Wells Fargo had steered black and Hispanic borrowers into subprime mortgages, gave them less favorable rates than white borrowers, then foreclosed on hundreds of Baltimore homes, creating more blight and crime in distressed neighborhoods.
“It all goes back to IBGYBG,” says Day, a long-time journalist on the faculty of the Johns Hopkins Carey Business School. “That means, ‘I’ll be gone, you’ll be gone.'” Time and again, Day says, she found IBGYBG to be a common attitude among officials at Wells Fargo and other major banks — an eagerness to take risks for short-term gain. “And, if it leads to disaster,” she adds, “it’ll be on someone else’s watch.”
But Wells Fargo has created more problems for itself since the housing crisis — setting up millions of unapproved bank accounts, for instance, and selling unnecessary insurance to customers who got automobile loans — and all of that further damaged its reputation, making its current hunt for a new CEO difficult.
But, during this same time, going back to the big housing discrimination settlement, Wells Fargo has been trying mightily to make up for its corporate sins by committing money to making a house more affordable, particularly for minorities.
In 2013, under the settlement over the housing discrimination allegations, the bank brought a program called CityLIFT to Baltimore, and, working with the nonprofit Neighborhood Housing Services, Wells Fargo made 386 interest-free loans to help low- to moderate-income families and individuals buy homes. They were down-payment assistance loans, at $15,000 each, and fully forgivable if the buyer lived in the house for five years. Some homebuyer education was required to get the help. The program cost Wells Fargo $5.8 million in Baltimore, and it funded CityLIFT in the District of Columbia, Chicago, Philadelphia and other cities hit hard by foreclosures.
More recently, the bank announced a $1 billion commitment to philanthropy through 2025, with an emphasis on housing affordability.
For Baltimore, that means a second round of CityLIFT, now called NeighborhoodLIFT. It returns this summer with another $6 million in new down-payment grants. The effort is scheduled to be announced Tuesday at City Hall, and NHS of Baltimore is again the local collaborator.
Among nonprofits and government agencies dedicated to building homeownership in the city, it’s a big deal. The first version of the LIFT program found enthusiastic demand, and one of Wells Fargo’s partners in the effort, HomeFree-USA, expects the same response when the application period opens in July at the Baltimore Convention Center.
Still, I had to ask Marcia Griffin, founder and CEO of HomeFree-USA, if Baltimoreans should trust Wells Fargo — or if her team of homeownership counselors still get the question about the bank’s past practices.
“We run into it,” Griffin said. “Look, we understand what happened in the past. We’re dealing with the future. Wells Fargo has been an outstanding partner for us. … Wells Fargo has stepped up to the plate when many others haven’t.”
Griffin’s organization is involved in an event to prime prospective homebuyers for NeighborhoodLIFT’s launch next month. Stedman Graham, the entrepreneur and motivational speaker best known for his longtime relationship with Oprah Winfrey, has top billing at the event, called “Step into Your Power: Prepare for Success through Homeownership.” It takes place Saturday at the Reginald F. Lewis Museum of Maryland African-American History and Culture.
Here are things Baltimoreans in the market for a house need to know about NeighborhoodLIFT:
To get $15,000 in down payment assistance, you have to be pre-approved for a mortgage with an eligible lender. It does not have to be Wells Fargo.
Your annual household income can be no more than 80 percent of the area median income.
Military service members and veterans, teachers and first-responders can get up to $17,500 toward a down payment. They can earn up to 100 percent of the area median income and still be eligible.
Starting on July 1, register at www.wellsfargo.com/lift to attend events at the convention center on July 19 and July 20.
Once you’re approved, you have up to 60 days to finalize a contract on a house in Baltimore. As in the earlier version of LIFT, you have to commit to live in the home for five years.
You can get a voucher for free homeownership counseling in addition to the homebuyer education you need to get a down-payment grant.
Is Your Name On The Deed?
Another program worth mentioning is “Homeowner: My Home, My Deed, My Legacy,” a new effort to keep more Baltimore houses from becoming vacant because the owner died without a will or because the present occupant’s name is not on the deed. The Maryland Volunteer Lawyers Service will hold a clinic on estate planning and deed confirmation for low-income residents Tuesday, 3-7 p.m., at the Arch Social Club, 2426 Pennsylvania Ave. in West Baltimore. More on this in a future column.
