The City of Philadelphia filed suit against Wells Fargo Bank on May 15, alleging Wells Fargo violated the Fair Housing Act of 1968. The basic allegation is that the bank used predatory lending practices with minority mortgage borrowers. Wells Fargo Bank denies the charges. The city filed the lawsuit in the U.S. District Court for the Eastern District of Pennsylvania.
Philadelphia investigated Wells Fargo for a year before filing the suit. They examined loan records going back ten years, for the period 2004 to 2014. They found that Wells Fargo discriminated against African-American and Hispanic borrowers by steering them to take out loans that had higher interest rates. Based on their credit records, the minority borrowers should have been approved for mortgages with lower interest rates. White mortgage applicants with similar credit scores did receive these less expensive mortgages with lower interest rates.
African-American homeowners were more than twice as likely than whites with similar credit histories to be steered to the more expensive mortgages. Hispanics were 1.7 times as likely than whites to have to pay the higher interest rates.
Also, Wells Fargo made it more difficult for African-American and Hispanic home owners to refinance mortgages during periods of falling interest rates than for white refinance applicants. This increased the foreclosure rates for the African-American and Hispanic home owners. Because these minority home owners were 4.7 times as likely to go into foreclosure, that increased the level of blight in minority neighborhoods. However, all of the mortgage applicants the city study had FICO scores of 660 or above.
This suit adds to Wells Fargo’s many recent problems. Recently the Supreme Court of the United States ruled that the city of Miami has the legal right to sue the bank under the Fair Housing Act if they can prove a connection between predatory lending practices and the harmful consequences. Philadelphia waited to file its lawsuit until the Supreme Court issued its decision on the Miami case. Other cities could decide to file their own lawsuits against Wells Fargo.
Karl Heideck is an attorney experienced in the areas of litigation, risk management review and compliance. He has worked as an attorney in Philadelphia, and has much experience filing complaints and responding to complaints. On behalf of his clients, Heideck takes actions against individuals and organizations. When his clients need his help, Karl Heideck represents them. Know more about anordinarysoldier.com
Karl Heideck earned a bachelor’s degree from Swarthmore College in 2003. Karl Heideck received his Juris Doctor (JD) law degree from Templeton University James E. Beasley School of Law in 2009.