Legal

Wells Fargo's Bid To Dismiss Predatory Lending Suit Rejected

Wells Fargo’s effort to toss out a lawsuit lodged by the city of Philadelphia failed, with the judge paving the way for the city to go after the embattled bank.

According to a report in Reuters, U.S. District Judge Anita Brody ruled that Philadelphia could pursue its claims that the bank engaged in predatory lending practices, in which it targeted Hispanic and black home mortgage borrowers. The city contends Wells Fargo’s action violated the federal Fair Housing Act. The judge did note that she had “serious concerns” about the claims that it created economic hardship.

In an email to Reuters, Wells Fargo spokesman Tom Goyda said that while the ruling was disappointing, “it in no way suggests that the claims ultimately will prevail. Wells Fargo has been a part of the Philadelphia community for more than 140 years, and we are prepared to defend our record as a fair and responsible lender.” Meanwhile, Mike Dunn, a spokesman for the city of Philadelphia, said it “looks forward to developing further evidence of Wells Fargo’s alleged discriminatory practices.”

This lawsuit against Wells Fargo is one of many being brought against big mortgage lenders by large cities around the country. The cities contend the mortgage lenders’ discrimination has resulted in more defaults by borrowers who are minorities, lower property tax revenue and increased expenses to fight crime.

Philadelphia contends that since 2004, Wells Fargo pushed minority borrowers into loans that had higher costs than white borrowers, even if they qualified for less costly and less risky loans. Because the loans were more expensive, the city also contends that black and Hispanic borrowers were more likely to foreclose on them.

Wells Fargo has argued that the city can’t prove that the bank’s policies had a negative impact on minority borrowers.

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