The city is suing the nation’s largest mortgage lender, alleging it discriminated against minority borrowers
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Sorrows are coming not single spies, but in battalions for Wells Fargo. The embattled banking giant is now being sued by the city of Philadelphia, which is accusing the bank of predatory lending.
The lawsuit was filed just two weeks after the Supreme Court ruled – in a case that also involved Wells Fargo – that cities can sue lenders for discrimination that causes defaults by minority borrowers.
Philadelphia is accusing the country’s largest mortgage lender of having steered minority borrowers into riskier, more expensive loans than white borrowers, according to a Reuters report. The city alleged that Wells Fargo steered minority borrowers into the risky loans even when they qualified for loans with better terms. The city also accused the bank of refusing to let minority borrowers refinance.
The city alleged that African-American borrowers were more than twice as likely as similarly situated white borrowers to receive hihg0-cost or high-risk loans. Hispanic borrowers were roughly twice as likely, Reuters reported. The city also claimed that home loans in predominantly minority neighborhoods were nearly five times as likely to be foreclosed.
According to the city’s complaint, Wells Fargo has a “long history” of “red-lining” and business practices – such as the creation of fake accounts that has buried the bank in scandal – that reflect a “total breakdown of appropriate internal controls.”
Wells Fargo, for its part, vehemently denied Philadelphia’s allegations.
“The city's unsubstantiated accusations against Wells Fargo do not reflect how we operate,” spokesman Tom Goyda said in a statement. “Wells Fargo has been a part of the Philadelphia community for more than 140 years and we will vigorously defend our record as a fair and responsible lender.”
Philadelphia’s complaint was brought by many of the same lawyers who represented the city of Miami in a recent Supreme Court case against Wells Fargo and Bank of America, according to Reuters. In that case, the high court ruled that cities could sue banks under the Fair Housing Act by demonstrating a direct link between alleged misconduct by the bank and injuries to the city.
Related stories:
HUD slaps California lenders with penalties for discrimination
Wells Fargo fails fair lending test over ‘egregious’ practices
The lawsuit was filed just two weeks after the Supreme Court ruled – in a case that also involved Wells Fargo – that cities can sue lenders for discrimination that causes defaults by minority borrowers.
Philadelphia is accusing the country’s largest mortgage lender of having steered minority borrowers into riskier, more expensive loans than white borrowers, according to a Reuters report. The city alleged that Wells Fargo steered minority borrowers into the risky loans even when they qualified for loans with better terms. The city also accused the bank of refusing to let minority borrowers refinance.
The city alleged that African-American borrowers were more than twice as likely as similarly situated white borrowers to receive hihg0-cost or high-risk loans. Hispanic borrowers were roughly twice as likely, Reuters reported. The city also claimed that home loans in predominantly minority neighborhoods were nearly five times as likely to be foreclosed.
According to the city’s complaint, Wells Fargo has a “long history” of “red-lining” and business practices – such as the creation of fake accounts that has buried the bank in scandal – that reflect a “total breakdown of appropriate internal controls.”
Wells Fargo, for its part, vehemently denied Philadelphia’s allegations.
“The city's unsubstantiated accusations against Wells Fargo do not reflect how we operate,” spokesman Tom Goyda said in a statement. “Wells Fargo has been a part of the Philadelphia community for more than 140 years and we will vigorously defend our record as a fair and responsible lender.”
Philadelphia’s complaint was brought by many of the same lawyers who represented the city of Miami in a recent Supreme Court case against Wells Fargo and Bank of America, according to Reuters. In that case, the high court ruled that cities could sue banks under the Fair Housing Act by demonstrating a direct link between alleged misconduct by the bank and injuries to the city.
Related stories:
HUD slaps California lenders with penalties for discrimination
Wells Fargo fails fair lending test over ‘egregious’ practices
