Recent News Recap – Wells Fargo
The City of Philadelphia has recently filed its lawsuit against Wells Fargo, stating that this bank has once again violated a Fair Housing Act through the use of predatory lending practices that targeted minority mortgage borrowers. Wells Fargo denies the allegations, stating that its practices are always fair and that any claims within the lawsuit are unsubstantiated. This lawsuit was filed last May within the U.S. District Court’s Eastern District of Pennsylvania, and it’s the latest in a number of problems for this large bank, which still reels itself from the unique scandal last year that involved a few of its bankers opening fake accounts in the names of real customers.
The city argues that Wells Fargo Bank, based in San Francisco, guided black and Hispanic borrowers to riskier loans with high interest rates though they should’ve been credit-qualified into lower-interest and lower-risk mortgages. Philadelphia also states that the bank has made it far more difficult for such borrowers to refinance any mortgages later on, forcing a higher percentage of these to foreclose. The city had investigated this claim for 12 months before filing its complaint.
By reviewing all data from loans over another 10-year period through Wells Fargo, the city’s authorities thus determined that black borrowers are likelier to receive a higher interest loan than white borrowers will ever be, and Hispanics are 1.7 times likelier to receive these riskier mortgage loans. All borrowers reviewed by the city obtained FICO scores of 660 and higher. White borrowers that had similar credit scores earned lower interest-mortgage loans than most other minority borrowers ever did.
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