The city of Philadelphia has recently filed a federal lawsuit against banking giant Wells Fargo & Co., accusing them of overcharging more than 1,000 black and Latino homebuyers for loans to buy homes in the city since 2004.
The suit was filed in U.S. District Court and states that unnecessarily expensive loans pushed minority borrowers toward foreclosures which caused the city to lose money due to unpaid taxes. The suite also states that the bank’s actions also drove down property values, and violated the federal Fair Housing Act.
The suit charges that Wells Fargo, the city’s largest bank, has hurt neighborhoods with a “longstanding, unbroken policy and practice of intentionally steering minority borrowers in Philadelphia into ‘discriminatory’ mortgage loans” at higher cost than it charges “similarly situated white buyers,”.
Responding, bank spokesman James Baum said, “The city’s unsubstantiated accusations against Wells Fargo do not reflect how we operate in Philadelphia” or other communities, where the bank is “a fair and responsible lender.”
“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,” Baum said.
The company now employs about 6,000 in Philadelphia, Wilmington, the suburbs and South Jersey, said Baum. It had 38 branches left in Philadelphia on June 30, according to the Federal Deposit Insurance Corp.
The bank’s shrinkage in Philadelphia was not a factor in the city’s decision to sue, said Dunn.
The lawsuit doesn’t make direct comparisons between black or Latino borrowers given high-cost loans, with white borrowers in exactly parallel circumstances.