ESSEX COUNTY, NJ — County Executive Joseph DiVincenzo Jr. announced Aug. 8 that Essex County is withdrawing all its accounts from Wells Fargo because of “predatory lending schemes and aggressive foreclosure practices by the banking giant,” according to a release from the county.
Under DiVincenzo’s directive, Essex County began removing its accounts from Wells Fargo in mid-June. The county had approximately $3.8 million with Wells Fargo, which accounts for just 2.65 percent of all the county’s money in banks, according to county spokesman Anthony Puglisi in an Aug. 10 email. With Wells Fargo out of the mix, the county continues to bank with 10 other banks: PNC, TD Bank, Bank of America, Valley National, Investors, City National, Garden State, Provident, Santander and Connect One, according to Puglisi.
“The predatory lending schemes and aggressive foreclosure proceedings practiced by Wells Fargo destabilizes neighborhoods and has a negative impact on families and the community. In addition, the recent reports that Wells Fargo denied mortgage modifications and ultimately foreclosed on those properties are further evidence of the bank’s malicious and insensitive treatment of people who placed their trust and financial futures with the bank,” DiVincenzo said in the statement. “As a county government we cannot control how banks operate, but we can support our residents and homeowners by sending a strong message that Essex County will only invest its funds with institutions that have client-friendly business practices and support community building.”
According to Gabriel Boehmer, a Wells Fargo spokesperson for its Government & Institutional Banking Division, in an Aug. 10 email, this move from Essex County came as a shock.
“We were surprised and disappointed to learn of the county’s decision. We have reached out to the county and look forward to discussing their concerns,” Boehmer said.
Wells Fargo has been beleaguered by bad press for the past few years for being one of the top foreclosing banks in New Jersey. And back in September 2016, the bank entered into a settlement with banking regulators in response to bank employees creating 3.5 million phantom accounts, without informing customers, in order to reach company sales targets; in that case, the bank agreed to pay $185 million in penalties and $5 million to customers. Last year, the bank disclosed that it had charged 570,000 auto-loan borrowers for insurance they did not request; the bank set aside approximately $80 million for those affected. In a settlement with the U.S. Justice Department in July, Wells Fargo, the second-largest mortgage lender in the nation, agreed to pay a $2.1 billion fine for issuing loans that it reportedly knew were based on false income information.
Most recently, the bank disclosed in an Aug. 3 regulatory filing that, due to a software glitch, the bank had denied mortgage modifications to approximately 625 clients — who otherwise may have been eligible for modifications — and subsequently foreclosed on approximately 400 homes accidentally.
“We are focused right now on completing a very thorough review to ensure we’ve identified every impacted customer. We are very sorry and will be reaching out proactively as quickly as possible to each impacted customer to make it right. If customers have concerns or questions, we urge them to contact us,” Boehmer said, adding that the bank does not yet have information about the number of New Jersey residents affected by this computer glitch.
According to ATTOM Data Solutions, a real estate tracking agency, New Jersey is one of the top states in the country for foreclosures; in June 2018, New Jersey was No. 1 in the country in foreclosures. According to the data, in June 2018, one home in every 564 in Essex County was foreclosed upon.
According to Puglisi, in May, June and July there were 598 foreclosures filed in Essex County.
Essex County is not the first government entity to divest from Wells Fargo in recent years. On Feb. 14, 2017, the East Orange City Council voted unanimously to divest from Wells Fargo. This came just one week after Seattle became the first city in the country to divest $3 billion from the bank.
But while some government entities have chosen to divest from Wells Fargo, Boehmer said many still trust the bank and continue to do business with it.
“The majority of our government banking and public finance clients continue to do business with us,” Boehmer said. “In fact, in May, the city of Seattle reversed its decision and remains a Wells Fargo customer.
“Other cities like Portland, Oregon, have recently renewed multiyear government banking contracts with us,” he continued. “In terms of public finance, the California Academy of Sciences in July selected Wells Fargo as senior underwriter for $281 million in tax-exempt bonds that will save the institution as much as $6 million over the next three years.
“Closer to you, the University of New Haven in April selected us as senior underwriter for $96.7 million in bonds,” he concluded. “These are just a few of our many recent government banking contracts and public finance transactions.”
While Wells Fargo is looking to work it out with the county, others in the county approve of DiVincenzo’s decision to divest.
“I am very pleased with the decision by County Executive DiVincenzo to sever Essex County’s relationship with Wells Fargo,” Essex County Board of Chosen Freeholders President Brendan Gill said in an Aug. 10 email. “The Board of Freeholders has been working, and will continue to work, with the local clergy and other community leadership groups to stop the unethical and immoral practices of institutions such as Wells Fargo unfairly foreclosing on homes.
“We realize that these issues are not restricted to Wells Fargo. As leaders of the county, we are tasked with holding all banks accountable for actions that are detrimental to our constituents,” he continued. “To that end, we will continue to work with leadership organizations throughout Essex County to ensure that the legacy of predatory lending institutions destroying the fabric of our communities is brought to an end.”
Among the clergy leaders pushing for the divestment is Rev. Ronald Slaughter, pastor at St. James AME Church, located in both Newark and South Orange. Slaughter had approached the freeholders in June to request divestment and he was confident the county would listen.
“I knew that the county executive, Joe DiVincenzo, was a reasonable man and really loves the citizens of Essex County,” Slaughter said in an Aug. 10 message. “I knew in the end the county executive would choose to put the people of Essex County first rather than Wells Fargo and therefore would divest the money to show that he stands with the families of Essex who have been taken advantage of by Wells Fargo.”
According to Slaughter, his call for divestment was a move to protect the families of Essex County who are struggling in the current financial climate.
“Banks like Wells Fargo only understand ‘the bottom line.’ Therefore, if one can affect their bottom line numbers, it will get their attention and help them to realize that the foreclosures in New Jersey, particularly Essex County, are a big deal. It’s destroying families, causing sickness and affecting our communities,” Slaughter said.
But Slaughter said he does not want this move to cut Wells Fargo out of the equation entirely — he hopes the bank will reevaluate and return with rates and policies that better serve Essex County residents.
“I hope to see Wells Fargo come to the table and hit the ‘pause’ button on the ongoing foreclosure proceedings while they conduct a forensic audit of every foreclosure,” Slaughter said. “If they do not issue a moratorium, I’ll move to pressure/appeal to the state and governor to legislatively stop these illegal foreclosures and for the state of NJ to divest its money from Wells Fargo, following the leadership of Joe DiVincenzo.”