Background:
- May 2017 the City of Philadelphia sued Wells Fargo accusing predatory lending violations..
- Predatory Lending violates the Federal Fair Housing Act.
- The City alleged that, since 2004, Wells Fargo steered minority borrowers into higher cost, riskier loans than white borrowers even if they qualified for loans with better terms.
- The City alleged Wells Fargo refused to let minority borrowers refinance.
- Black and Hispanic borrowers were much more likely to go into foreclosure on the loans that Wells Fargo gave them.
- Philadelphia’s higher default rates for minority borrowers hurt the City financially: lower property tax revenues and higher costs to combat crime and blight.
Outcome:
- December 2017 Wells Fargo agreed to pay the City of Philadelphia $10 million to settle the lawsuit.
- Wells Fargo denied the allegations in Philadelphia’s claim.
- $8.5 million will be used to provide down payments and closing costs for low and moderate-income families.
- The remainder of the money will go to preventing foreclosures and revitalizing vacant lots.
