Philadelphia has filed a federal lawsuit accusing Wells Fargo & Co. of overcharging more than 1,000 black and Latino homebuyers for loans to buy homes in the city since 2004.
Citing six confidential informants who formerly worked for the bank, the city says Wells Fargo knew or should have known that those borrowers could not handle these loans at those terms.
The suit, filed in U.S. District Court, says unnecessarily expensive loans drove minority borrowers toward foreclosures that cost the city unpaid taxes, drove down property values, and violated the federal Fair Housing Act.
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,” the suit charges.
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.
Baum cited the U.S. Supreme Court’s May 1 ruling on an appeal of a Fair Housing Act discrimination lawsuit against Wells Fargo and competitors, holding that banks “cannot be held responsible for harm they didn’t cause.”
In that case, filed against Wells Fargo and other banks by the City of Miami, Justice Stephen Breyer, writing for the court majority, ruled that “the housing market is interconnected with economic and social life,” and plaintiffs such as Philadelphia have to prove a “direct relation” between lawbreaking and damages — a higher standard than merely showing a bank broke the law.
Source: The Philadelphia Inquirer |