Wells Fargo has been in the news lately for all the wrong reasons, after it came to light that employees signed up customers for accounts without their knowledge and charged them for it. Now the bank is facing a federal lawsuit from the City of Philadelphia over its lending practices.
Bad loans for people of color?
Philadelphia is accusing Wells Fargo of violating the federal Fair Housing Act. In the lawsuit, summarized by CNBC, the bank is alleged to have pushed minority mortgage applicants into riskier loans with higher interest rates than white applicants.
“Both the resources of the city and the lives of Philadelphia’s citizens have been negatively affected by Wells Fargo’s discriminatory lending practices,” city Solicitor Sozi Pedro Tulante said in a statement.
The evidence against Wells Fargo
The city’s lawsuit is based on loan data. Analysis of the data revealed that 7.6 percent of loans Wells Fargo issued to white people were high-risk. For people of color, 23.3 percent were issued high-risk loans.
Wells Fargo allegedly ignored credit scores when deciding what quality of loan to offer. Black applicants with FICO credit scores above 660 were 2.5 times more likely than whites with the same score to get a risky loan.
Wells Fargo says the charges are false and lack evidence. The bank swore to “vigorously defend our record” in court.
Protect your business
The housing industry is regulated by a complex network of statutes, court decisions and government regulations. Real estate developers and landlords often find themselves being sued. If you are facing litigation, you need knowledgeable and tenacious legal representation. Your business lawyer can help you take steps to avoid legal problems, defend yourself against a lawsuit and pursue compensation.