Redlining targets Black Minnesotans and neighborhoods

Wells Fargo leads pack according to U of M report on sub-prime lenders

By Charles Hallman
Staff Writer


A new University of Minnesota Law School study shows that Blacks and other communities of color and low-income residents in the Twin Cities still lack access to credit. It is an update of a 2009 study that found that Blacks and Latinos — even with “very high income[s] — were much more likely to get sub-prime loans than very low-income White applicants.”

“It’s hard to believe that systemically a Black family that is making $157,000 a year is less likely to qualify for a prime loan than a White family that earns 40 [thousand a year],” noted Myron Orfield, the director of the Institute on Metropolitan Opportunity, which is housed at the U of M Law School.

The report also shows that Blacks and other people of color who live in two North Minneapolis neighborhoods had the highest number of sub-prime loans compared to Whites in the same neighborhoods: 59 percent for people of color compared to 42 percent Whites in Near North; and 55 percent for people of color in Camden compared to 29 percent for Whites. These two areas also “were most dramatically affected” among Twin Cities neighborhoods.

“Our report [reveals] discrimination in lending against individuals on the basis of race, and also discrimination in lending against neighborhoods on the basis of race,” noted Orfield, who heads the U of M Law School’s

Ruby Brown Photos by Charles Hallman
Ruby Brown
Photos by Charles Hallman

Institute on Metropolitan Opportunity (IMO).

Ruby Brown, who was briefly featured last week in a Minneapolis newspaper’s published article, took out a sub-prime loan in 2007 to help her small business and almost lost her Northside home in the process. She told the MSR, “For someone to come and say, ‘Hey, you have a couple of hundred thousands of dollars worth of equity in your house. You can pull out some and take care of this, and take care of that and still be okay,’ you do it because you respect the individual that’s involved with [you], and you sign on the dotted line.

“I was in a desperate need of cash flow,” recalled Brown. “I had a small business [and] I needed money — I wanted to keep it going. I went that route. I [later] realized…I was a victim.”

“You think when you go to your loan officer, he is going to be honest and give you the best deal you could possibly qualify for,” said Bill Clark, a former Wells Fargo loan officer. The IMO report also points out that Wells Fargo accounted for nearly one-fourth of the sub-prime loans from 2009 to 2012.

“It couldn’t be happenstance that everybody of color’s [interest rates] was higher than anyone else’s,” said Clark. During his four years at Wells Fargo, a manager advised him not to tell Black loan applicants that if approved, they would get higher-interest loans. “I was supposed to be quiet [about it],” he admitted.

Although her loan didn’t come from Wells Fargo but from another bank, Brown said that at least four other Blacks besides her took out sub-prime loans from the same financial

Myron Orfield
Myron Orfield

company. She and only one of the other four people still have their homes.

“Hindsight is 20/20, but [when comparing] what I knew then [with] what I know now, yes, I would have done things totally different,” admitted the homeowner. “Three other people I know lost their homes, and one was my best friend.”

Rev. Carl Walker also told the MSR that at least five of his church members have lost their homes to foreclosure mainly due to sub-prime loans. “Our community has really suffered at the hands of big bankers. These are the financial bullies that have mistreated our people for so long,” he noted. “I got folks in my own church that have been put out of their homes.”

Orfield’s report was announced during an April 10 noontime press conference outside Minneapolis City Hall by ISAIAH, Neighborhoods Organizing for Change (NOC) and Minnesotans for a Fair Economy.

“Redlining is alive and well, and worse than it ever was,” admitted NOC Executive Director Anthony Newby as he and Orfield roundly criticized Wells Fargo. Newby earlier told the MSR that City officials should follow such cities as Baltimore and Memphis in taking legal action against banks that have issued sub-prime loans.

“There is something the City can do about wealth that has been stripped and stolen,” he suggested.

Microsoft Word - TwinCitiesLending2014v8Brown was among several individuals who also spoke as well as City Council Members Elizabeth Glidden, Blong Yang and Cam Gordon, who told the sparse group of reporters, including the MSR, “I’m angry, embarrassed and ashamed of what is going on here.”

“It is a serious report that deserves a serious look,” said Glidden afterwards to the MSR. “Even with that report, we know that addressing racial disparities in home ownership is a key issue… The report added leverage and added incentive.”

Glidden, however, expressed hesitance in discussing possible legal action as a next step. “There’s a range of things other cities have done to address this issue,” including filing lawsuits, she said. “I don’t want to foreclose any direction other than to say we know that this is a serious issue. We take it seriously.”

Yang told the MSR, “It happens more frequently in Ward 4 and Ward 5 than anywhere else, [but] I don’t see the urgency to get something done [about it]. We have to find ways to fix that.”

Brown strongly urged homeowners who have sub-prime loans and are in danger of losing their homes through foreclosure “to come out of the closet” and seek help before it is too late.

“That’s one of the reasons why I am on the front line,” Brown said — “for awareness and change.”


To view the he full report from the University of Minnesota Law School, go to

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