·  Legal News, Analysis, & Commentary

Lawsuits & Litigation

Wells Fargo Agrees to Settle Discriminatory Lending Suit for $10M

— December 19, 2019

Well Fargo and the city of Philadelphia recently agreed to a $10 settlement, ending a suit involving allegations of discriminatory lending practices.

The city of Philadelphia recently agreed to settle a lawsuit it filed against Wells Fargo Bank back in 2017 over allegations the bank was partaking in discriminatory lending practices. The lawsuit settled for $10 million and will largely be “spent on down payment and closing cost assistance for homebuyers up to 120% of the area median income, or $97,320 for a family of three.” When commenting on the settlement, city solicitor Marcel Pratt issued the following statement:

Our focus has been on directing relief to the neighborhoods that were the subject of the litigation, which were communities of color that continue to face challenges. One of the advantages of this resolution is that we secured valuable benefits that would not have been available through pursuing our litigation.”

Lady Justice
Lady Justice; image courtesy of AJEL via Pixabay,

The city originally filed the lawsuit because it claimed the bank “targeted Black and Latinx neighborhoods with predatory loans in a process known as reverse redlining, where non-white borrowers are sold mortgages with exorbitant fees and interest rates.” In doing so, Wells Fargo violated the Fair Housing Act, according to the lawsuit. It further argued that “almost a quarter of loans to these populations were high-risk, while fewer than 8% of loans to white customers were.” The city also claimed Wells Fargo was aware of the disparities “and even encouraged employees to take advantage of them, which Wells Fargo adamantly denied.”

As a result of the settlement, it is estimated that 950 families will no be able to become homeowners. When asked about the agreement, Paul Chrystie, a spokesperson for the city said:

Both in the context of current funding and in the context of a City with limited resources generally, this $10 million settlement is anything but small.” 

Of the $10 million, $8.5 million will go towards covering grants designed to “assist with closing costs while $1 million will be spent to bolster the city’s foreclosure prevention program.” In fact, city officials estimate that the $1 million will help prevent 250 foreclosures. The last chunk of the settlement, a whopping $500,000, “will go towards Philadelphia’s vacant land care program, which will allow 165 additional lots to be maintained and cleaned over the next three years.”

In addition to the monetary side of the agreement, both parties must work together to establish a program called ‘Understanding Philadelphia.’ The program will aim to “educate bank employees who work on mortgage loans in the city, teaching them about the history of the urban housing market and what contemporary needs are.

In response to news of the settlement, Joe Kirk, Wells Fargo’s Greater Philadelphia Region Bank President said:

We’re pleased that we’ve been able to resolve this matter in a way that will provide real, tangible sustainable homeownership opportunities for many low- and moderate-income residents of Philadelphia.”



Wells Fargo will pay Philadelphia $10M to settle city’s discriminatory lending lawsuit

Wells Fargo pays $10M to settle lawsuit over discriminatory lending practices in Philly

Join the conversation!