News reports indicate that the City of Philadelphia recently filed a lawsuit against Wells Fargo & Company. The city is alleging that the bank dishonored the Fair Housing Act of 1968. It is argued that the bank used predatory lending practices targeting minority mortgage borrowers. However, the bank has denied the allegations noting that it has fair practices. Wells Fargo claims that the lawsuit is unsubstantiated. The City of Philadelphia filed the lawsuit on May 15 in the district court for the Eastern District of Pennsylvania in the US. The bank has been facing a series of scandals last year where bankers were opening bogus accounts in the name of its clients. Therefore, this lawsuit is the latest in the series of problems facing the large bank.
Philadelphia is the fifth largest city in the United States, with a population of 1.57 million people. The town has a large minority population with about 43 percent of its residents being black and 12 percent being Hispanic. The alleged lending practices of Well Fargo towards the minority population in the city hurt the city’s economy because most borrowers who applied for loans to refinance their mortgages had their applications turned down. That resulted in the foreclosure of the applicants’ homes. The city argues that the practice hurt the city because it caused lower property values in the affected locations, more frequent vandalism cases, and higher crime rates.
Wells Fargo has its headquarters in San Francisco. The City of Philadelphia also accused the bank of steering Hispanic and black borrowers into getting riskier loans than other borrowers with higher interest rates even if they qualified for low-risk and low-interest rate mortgages. The city claims that it investigated the claims for about one year before filing the lawsuit. The city also claims that black borrowers were twice likely to be given higher interest loans for loans with a repayment period of ten years. Additionally, Hispanics were 1.7 times likely to get riskier mortgage loans than other white borrowers. However, Wells Fargo disputed the claims made by the city through their spokesman.
About Karl Heideck
Karl earned his Bachelor of Arts in English language and literature in 2003 from Swarthmore College. He also received his Juris Doctor in 2009 from the Temple University Beasley School of Law. Heideck focuses practice in an array of areas such as risk management, civil litigation, compliance management, and helping clients throughout Philadelphia areas.
Karl is currently concentrating as an attorney dealing with bank litigations, fraud cases, and securities. Karl is also focusing on acquisitions, liquidity, transactions problems related to the mortgage crisis of 2008, and risk management. Karl Heideck has gained many years of experience working as a litigator.
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