Did Predatory Lending Target Black Communities?

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BALTIMORE -- Baltimore's Inner Harbor is postcard perfect.

After all, it is one the city's most photographed areas and home to its most popular tourist attractions.

But the picture begins to fade only six miles away on Shirley Avenue.

"You have more empty houses here than you have people living in," Baltimore resident Patrick Penn said.

Penn owns a home here, but he's watched a growing number of his neighbors lose theirs to foreclosure.

And each empty house adds new trouble to an already troubled neighborhood.

"The people move out of their homes and drug dealers take over the empty homes," Penn said. "I mean it is obvious."

Racism's Ugly Consequence

It isn't just Shirley Avenue. Foreclosure snap-shots are about the same on Clinton Avenue and on Arnold Court.

They're all predominately African-American neighborhoods. City leaders say it's not a coincidence, but an ugly consequence of racism.

Baltimore blames mortgage giant Wells Fargo and is suing the bank, alleging it targeted "those neighborhoods for abusive subprime lending practices."

In the lawsuit, two former company employees admit there were "financial incentives to encourage employees to target African American neighborhoods ... for deceptive, high priced loans that resulted in unnecessary foreclosures" -- even if they qualified for a standard loan.

CBN News spoke the city's leading attorney George Nilson about the case.

"The city's goal is two-fold: One is to make sure the practices that are alleged in the complaint do not continue," Nilson said. "But also to recover damages caused to the city by the Wells Fargo behaviors and foreclosures."

Wells Fargo wants the lawsuit dismissed, but so far, a judge has denied that motion.

The bank would not consent to an interview. But in a written statement, the company told CBN News:

"We welcome the opportunity to set the record straight and demonstrate the many controls we have in place to ensure fair, responsible, and nondiscriminatory lending for all our customers."

Black Communities Targeted

Baltimore's lawsuit against Wells Fargo names 163 foreclosed, vacant homes. Each address is in a predominately black neighborhood. And the suit says black neighborhoods weren't the bank's only target, so were black churches.

"The black churches in the city were used as marketing devices because that is where large numbers of African Americans gather and could be found together," Nilson said.

To back up its charges of racism, the lawsuit alleges the bank "refused to let white employees make presentations to those African American audiences," referred to subprime loans in minority communities as "ghetto loans," and referred to minority customers as "mud people."

Jamal Bryant is pastor of Empowerment Temple.

"This story really disheartens me because I think I got caught up with many of other African Americans to believe that racism was dead," Bryant said.
"You really don't know who you are in God until you get to the place where you have to dance by yourself," he added.
Bryant started the church nine years ago after leaving the NAACP. It's grown from 43 members to more than 10,000.

As the name clearly states, this church's mission is to empower members spiritually, politically, and economically. 

They are watching this court case closely.

"We are still waiting because really the court case is still swinging in the pendulum, and so we are waiting for the gavel to come down," Bryant said. "But we are holding our breath and believe that justice is going to roll down like a mighty stream."

Churches Sent the Wrong Message?

Pastor Bryant told us this ordeal has affected his congregation and those from other churches.

But he doesn't only blame Wells Fargo. Bryant says the church must also accept responsibility.

"We are really trying to do a healing from the top and bottom and it has been a great learning experience for the church, because in some large measure, the church is guilty of reckless endangerment because we gave a false premise that the sign of you being blessed is you having a large house," Bryant said.

"The sign of you having favor is you being able to move. We would get up and testify I moved into this wonderful home, no money down. And the whole church clapped and applauded. And nobody said read page six and see exactly where this balloon is going to get you," Bryant said. 

"So when you get evicted, we say it is the work of the devil. But when we got the house, we say it is the work of God. At some point, we have got to take some ownership and some responsibility," he added.

A New Kind of Ownership

Ownership and responsibility are exactly what Patrick Penn is looking for in new neighbors on Shirley Avenue.

And he thinks the church may be the answer.

"Educating the people in this neighborhood on home buying and how to keep your home. That is how I feel the church can get involved," Penn said. "I believe the church has a big impact in this community because all of us are God-fearing people here."

*Original broadcast July 27, 2009.

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CBN News
Efrem Graham

Efrem Graham

News Anchor & Reporter

Efrem Graham is an award-winning journalist, who comes to CBN News from the ABC owned and operated station in Toledo, Ohio.  He received his master's degree from the Columbia University Journalism School. He also holds a bachelor's degree in English Literature from the Richard Stockton College of New Jersey.  Follow Efrem on Twitter @EfremGraham and "like" him at Facebook.com/EfremGrahamCBN.