Predatory Banking Practices Used Against Minorities

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HSI Trust, a non-profit working on a national level, attempts to ameliorate and protect the rights of people victimized by America’s financial crisis and to expose predatory banking practices. HSI Trust works in tandem with the a coalition of non-profit organization in California, including the California League of Latin American Citizens for which I am state director.

Given the national scope of HSI Trust’s work, they are able to detect trends in the way that banks are dealing with their customers. One trend that is intuitively obvious to them is that minorities are getting treated differently than white Americans. For example, one bank’s employees, whether they are talking about Cambodians, Thais, Vietnamese and other East Asians, they refer to them as “Chinese.” At the risk of obfuscating that which ought to be intuitively obvious, this is below the standard of ignorant. The Cambodian language is Sanskrit based (from the Indian sub-continent) whereas the Vietnamese language is more related to Chinese.

One of the predatory techniques used by banks to ripoff hard-working immigrant communities is to provide them with a translator to help them fill out their loan applications but then not give them a translator when they sign the actual mortgage documents. This is precisely what Wells Fargo did to a Latino immigrant family in California that HSI is currently working with, and as HSI puts it “Wells Fargo continues to ask for extensive financial documents that we believe would not be necessary if they were not a minority borrower.”

Another practice of the banking industry that winds up being abused and misused is to require people—most often minorities and particularly Latinos—to document their income by depositing cash income into their bank accounts. The practice is not inherently unwarranted, it is a simple way to prevent people from inflating their reported income to defraud the bank when they run a cash business. But if one hand at the bank doesn’t know what another bank is doing, it can lead to disaster. In some cases, banks do not allow minority depositors to withdraw their own money.

All of the mortgage servicers engage in this process of requiring rent or if any other cash transaction being deposited to “verify” income. This practice disproportionally impacts minorities and in particular Latinos. HSI Trust has also seen this handled differently when the bank’s client’s last name does not identify ethnicity, by having them provide leases or statements from tenants, along with payment receipt copies and tax returns with no requirement to deposit cash.