State Probe of Wells Urged
At first, Ruby Gomez liked the idea of refinancing her $167,000 mortgage at a more favorable fixed rate, which would allow her to pay off some of her credit card debts.
She said she was told by her longtime lender -- Wells Fargo Financial -- that she had good credit based on her history of paying bills on time and was assured that the new terms would be manageable.
But it was only after the Montclair resident signed the documents for a new $209,000 loan last December that she learned how onerous her expenses would be.
Not only did her monthly payment grow by nearly 40%, to $1,468, she was locked into a not-so-favorable adjustable-rate mortgage that included $9,000 in fees and a $6,000 prepayment penalty that prevented her from refinancing with another lender.
And now, her credit has a blemish because she was forced to miss a payment last month.
“I kept myself afloat for so long but now I’m sinking,” she said.
Gomez last week joined a group of other Wells Fargo Financial customers in urging the state’s top prosecutor to investigate the company’s sales tactics.
They contend that the lender, which is a sub-prime lending unit of banking giant Wells Fargo & Co., misled them with unfair and deceptive practices.
Wells has had “a pattern and practice of abusive lending,” said Heidi Li, an attorney with ACORN, a national community-based organization that helped the consumers take their complaints to the state attorney general’s office.
It wasn’t the first time ACORN had put a sub-prime lender in its sights. The group has an ongoing campaign in California and other states against Wells for what it alleges are the company’s “predatory” lending practices targeting unsophisticated borrowers living in minority communities.
Wells has previously come under California regulators’ scrutiny and last year had its state mortgage-lending license revoked.
For its part, Wells says ACORN has “repeatedly tried to distort and misrepresent our business practices and procedures.”
“The sales practices of our consumer finance business are among the best in the industry,” Wells said in a statement. “We have a long-standing policy and process for responding to customers who have complaints.”
Benjamin Diehl, deputy attorney general, acknowledged that his office had received the Wells customers’ complaints. “We will review them and take whatever action is appropriate,” he said.
