On May 2015, the City of Philadelphia filed a lawsuit against Wells Fargo & Co. The City alleged that Wells Fargo had violated Fair Housing Act of 1968 by using unscrupulous lending practices to defraud low-class mortgage borrowers. Redlining is illegal if it is done in a way to discriminate people based on races. On its side, Wells Fargo denied the allegations terming them as unsubstantiated. The lawsuit was filed in the U.S District Court for the Eastern District of Pennsylvania.
The city alleged that the San Francisco-based bank has been offering riskier loans and higher interest rates to blacks and Hispanic borrowers. According to Philadelphia, this strict borrowing condition has made it difficult for this group of people to finance their mortgages. Data from the last ten years indicate that blacks and Hispanic groups are much likely to be given loans at higher interest rates compared to the whites. As a matter of fact, blacks and Hispanic were 1.7 times more likely to receive riskier mortgages than whites.
Troubled Wells Fargo
The Philadelphia lawsuit adds legal problems to the already troubled Wells Fargo Bank. The Bank is still struggling to recover from the infamous scandal concerning the creation of fake customer accounts to falsely imply that bankers were meeting their sales targets. This lawsuit also comes after Miami was cleared by the Supreme Court to sue Wells Fargo Bank and the Bank of America under the Fair Housing Act. On its side, Wells Fargo has rubbished the allegations claiming that it has served the people of Philadelphia for over 140 years without racial discrimination.
About Karl Heideck
Karl Heideck is an experienced attorney specializing in compliance, litigation and risk management. Karl graduated from Swarthmore College with a bachelor’s degree in English language and literature. Karl Heideck later earned J.D degree from the Temple University’s James E. Beasley School of Law.
Currently, Karl Heideck works as a contract attorney at Hire Counsel, a position he has held since 2014. Karl began his career after graduating from law school when he worked as an associate at Conrad O’Brein. He later served as project attorney at Pepper Hamilton LLP before joining Hire Counsel. Karl Heideck is also a prolific writer on contemporary legal issues.