Philadelphia Sues Wells Fargo Over Discriminatory Lending Practices
On Monday, Philadelphia filed a federal lawsuit against Wells Fargo asserting that the bank has engaged in discriminatory lending practices against black and Latino home loan borrowers.
The lawsuit alleges that since 2004, Wells Fargo has operated in violation of the Fair Housing Act by pushing black and Latino borrowers towards high-cost or high-risk loans even when those borrowers were eligible for more favorable options.
The complaint further claims that Wells Fargo incentivized employees who steered minority borrowers to the risky and high-cost loans and specifically calls out Wells Fargo’s “lender credit” loan. The credit allows the bank to pay a borrower’s closing costs upfront but the borrower would have to accept a loan with a higher interest rate.
The city investigated Wells Fargo’s lending practices through an analysis of available loan data, which found that the practices disproportionately impacted minorities. About 23 percent of loans from Wells Fargo to minority customers in Philadelphia were high-cost or high-risk, while only eight percent of loans made to white customers were high-cost or high-risk.
“The City of Philadelphia’s investigation revealed that both the resources of the City and the lives of Philadelphia’s citizens have been negatively affected by Wells Fargo’s discriminatory lending practices,” said City Solicitor Sozi Pedro Tulante. “The Law Department must take action in light of this evidence and halt these discriminatory practices on behalf of the citizens of Philadelphia.” Read more »