Banking giant must face suit accusing it of predatory lending

by Ryan Smith18 Jan 2018
A federal judge has rejected a motion by Wells Fargo to dismiss a lawsuit accusing it of predatory lending.

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 lending program.


Related stories:
Billion-dollar settlement takes a bite out of Wells Fargo’s Q3 earnings
Wells Fargo axes head of consumer lending
 

COMMENTS

  • by mark | 1/18/2018 11:41:48 AM

    So, banks no longer have the rightto assess risk and assign appropriate fees? This is ANOTHER attempt by the left to cause UNCERTAINTY in the home mortgage industry. Loan costs and interest rates are determined by credit history and evidence provided by the borrower that indicate how credit worthy they are. Remember banks got into trouble '05,'06,'07,'08 when the government forced them to increase the percentageof mortgages in their portfolio granted to "the poor" and "minorities" Banks hadno lowcostmortgage product for that as THEIR job is to not LOSE money.So being forced into it they used mortgages normally used for people who were self employed. No income no asset mortgages, stated income mortgages.
    SUDDENLY anybody who could show they paid their cable bill and gas and electricity bill gota home mortgage.
    When the perceived risk is high you pay a higher rate of interest fee and sometimes moreof a processing fee because MORE WORK is done to try toestablish a credit history. In MY part of the country ,as a Realtor who started out 20 yrs ago as a mortgage processor and mortgage officer,I have a HIGH frequency of 30+yearold people coming to me to buy homes who NEVER even had a checking account or a credit card. THESE people will traditionally wind up paying more for their mortgage than a person with even a three year historyof credit worthiness.

  • by | 1/18/2018 7:15:04 PM

    Not only predatory Lending, but its almost impossible to modify with Wells Frago !!!!!

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