Just two weeks after the Supreme Court weighed in on the matter, the city of Philadelphia is moving forward with a discrimination lawsuit against Wells Fargo & Co.
Earlier this month, the Supreme Court decided that the city of Miami could move forward with its Fair Housing Act lawsuit against Wells Fargo.
Miami
alleges that the San Francisco-based financial institution violated the Fair Housing Act by targeting blacks and Latinos with predatory home loans.
On Monday, the city of Philadelphia announced that it filed a lawsuit in U.S. District Court for the Eastern District of Pennsylvania against Wells Fargo.
“The complaint is based on an assessment of Wells Fargo’s lending practices, applicable legal authority, and an analyses of available loan data by the city’s outside counsel and their experts,” according to the statement. “The analyses found that 23.3 percent of loans from Wells Fargo to minority customers in Philadelphia were high-cost or high-risk, while only 7.6 percent of loans made to white customers were high-cost or high-risk.”
The bank is accused of steering black and Latino borrowers into high-cost loans even though they qualified for better terms. Blacks were reportedly 2.1 times more likely than whites to thrown into a high-cost loan, while Hispanics were 1.6 more likely. The city claims that there was racial disparity even when
credit scores were better than 660.
The city says borrowers in minority neighborhoods are 4.7 times more likely than their white counterparts to end up in foreclosure.
Additional allegations include charging higher interest rates than were needed to cover
closing costs paid by the bank, which left the borrower paying a higher interest rate long after lender credits were repaid, “generating additional revenue for the bank with no additional benefits for the borrower.”
In a written statement, Wells Fargo, which says it
has been a part of the Philadelphia community for more than 140 years, called the accusations “unsubstantiated” and said they don’t reflect how it operates in any of the communities it serves.
The city referenced the Supreme Court’s May 1 decision.
“The court’s decision upheld bedrock legal principles under the [Federal Housing Act] and re-affirmed the important role of cities in combating housing discrimination within our communities,” the city said.
But
Wells Fargo sees the decision differently.
“The U.S. Supreme Court’s recent ruling in the city of Miami case means that, for Fair Housing Act claims, financial institutions cannot be held responsible for harm they didn’t cause,” Wells Fargo shot back. “These types of cases have been pending in other states and have been rejected by all courts who have addressed the merits of the claims.”
Philadelphia is asking for lost property tax revenues on abandoned properties. It also wants to be compensated for lost taxes on non-foreclosed properties that suffered a decline in values.
For its part, Wells Fargo said it “will vigorously defend our record as a fair and responsible lender.”
