The city of Philadelphia is suing the banking giant, accusing it of predatory lending targeting black and Hispanic borrowers, according to a Reuters report. Wells Fargo had tried to get the case tossed, but US District Judge Anita Brody said Tuesday that Philadelphia can pursue its claim that the bank engaged in “reverse redlining” that violated the Fair Housing Act.
The city has accused Wells Fargo of steering minority borrowers into higher-cost, higher-risk loans than white borrowers – even when the minority borrowers qualified for better loans. The city said that black and Hispanic borrowers were 4.1 times and 2.6 times, respectively, more likely to face foreclosure on those high-risk loans than they were with safer mortgages, Reuters reported.
In her decision, Brody found “some direct relation between discriminatory lending and the harms to the city’s goals of fair housing and an integrated community.”
Wells Fargo spokesman Tom Goyda told Reuters that Tuesday’s decision was “disappointing” but “in no way suggests that the claims ultimately will prevail. Wells Fargo has been a part of the Philadelphia community for more than 140 years and we are prepared to defend our record as a fair and responsible lender.”
The lawsuit is just one of many headaches the banking giant has faced in recent years. Wells Fargo spent much of 2017 being rocked by scandals, including the firing of its head of consumer lending
in November and a $1.2 billion settlement
over claims relating to its FHA
Billion-dollar settlement takes a bite out of Wells Fargo’s Q3 earnings
Wells Fargo axes head of consumer lending
A federal judge has rejected a motion by Wells Fargo to dismiss a lawsuit accusing it of predatory lending.