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Irvington Squares off Against Wells Fargo in Fight Over Foreclosures

“In 2012, Wells Fargo was the No. 1 originator of home loans overall and across the board in all key categories in New Jersey and nationwide, including loans to African-Americans, Asians, Hispanics, Native Americans, low- and moderate-income borrowers, and residents of low- and moderate-income neighborhoods,” Friedlander said.

“We have been extremely active in New Jersey helping customers who have encountered financial problems stay in their homes,” through counseling sessions and working with housing groups such as La Casa de Don Pedro and New Jersey Community Capital, he said.

Over the past decade, Wells Fargo has jumped headfirst into the mortgage business. Just after the turn of the century, it originated only about 7.3 percent of mortgage loans. By 2007, it ranked second in the country, but still only at 11.2 percent.

That was well behind high-flying Countrywide Financial, whose reckless practices included a heavy push of “subprime” mortgages, often to inexperienced buyers, frequently in minority neighborhoods, generally at easy initial terms but inflated longer-range interest rates.

Banks then packaged those substandard mortgages into securities, which ratings agencies mislabeled as secure, allowing them to be sold to investors large and small throughout the country and the world. When those toxic mortgages inevitably went bust, the effects spread throughout the economy, causing the recession.

With less involvement in the subprime debacle, and few overseas entanglements, Wells Fargo rode out the storm better than most. It began picking up the pieces, either directly by buying the failing Wachovia Bank, or indirectly by acquiring housing-loan portfolios from more exposed competitors like Bank of America in 2011.

Through such moves, Wells Fargo market share surged to 24 percent of loans and refinances. By last year, that soared to a reported one-third, although the bank currently puts its share at about one-quarter.

The bank’s performance has won plaudits. This month. “American Banker” magazine named Wells Fargo CEO John Stumpf its “banker of the year.”

“Wells is now the largest employer among U.S. banks (270,000 employees, or 'team members' in the Wells vernacular),” the magazine reported. “It is the fourth-largest bank by assets ($1.5 trillion) and with 6,200 retail branches from coast to coast, it is one of the few lenders with a truly national scope.”

But in its otherwise glowing profile, the magazine nevertheless noted that “struggling homeowners are much more critical of Stumpf.”

A major organization of housing advocates, the California Reinvestment Coalition, reported in April that “when asked which servicer was most difficult to work with, most counselors named Wells Fargo.”

Last year, a leading banking industry analyst, Richard A. Bove of Rochdale Securities, captured the two sides of Wells Fargo’s image. As an investor, Bove wrote, he considers it one of the best-run banks anywhere. But as a customer, Bove became so frustrated that he moved his accounts to JPMorgan Chase.

In Irvington, some question Wall Street’s agenda in buying up mortgage portfolios to turn around and foreclose on the homeowners.

“If we don’t fight back, they’ll take our homes and then rent them back to us,” said Kathleen Witcher, president of the Irvington chapter of the National Association for the Advancement of Colored People.

A prominent New Jersey real-estate lawyer doubts that banks have returned to the bad old days when “redlining,” not making loans in minority communities like Irvington, was common.

In the aftermath of the recession, major lenders are being cautious and making “data-driven” decisions about lending, said Peter Reinhart, a former president of the New Jersey Builders Association and current executive director of Monmouth University’s Kislak Real Estate Institute.

Even as foreclosures rise again in New Jersey, the state’s broader real-estate market is shaking off other effects from the downturn, Reinhart said, and “2013 actually has been a pretty good year.”

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