Wells Fargo & Co. may not be out of the woods yet as another scandal has emerged. The City of Philadelphia has sued the company as a result of that scandal. The claims are coming a year barely after its bankers got accused of opening bogus accounts using customer’s information.
The City of Philadelphia has accused Wells Fargo of violating the Fair Housing Act of 1968 by using unfair lending practices that led Black and Hispanic borrowers into loans that were riskier and with higher interest rates even though they had qualified for better options. Investigations by the city on data from loans dating as far as the last ten years reveal that black and Hispanic borrowers were twice and 1.7 times more likely to acquire riskier mortgage loans respectively, compared to white borrowers.
The City of Philadelphia is among the largest cities in the United States. The city has a population of about 1.57 million people, 43 percent of whom are blacks with Hispanics making up 12 percent of the population. With such a huge population of minorities, Wells Fargo’s practices hurt the city since subsequent loan applications from the minorities were denied and their homes lost due to foreclosure.
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Redlining is a term given to the practice where banks draw red lines around regions with individuals that they do not wish to give loans. It is an illegal practice if conducted in such a way as to focus on race and other unfair profiles. Wells Fargo is not only denying the allegations against it but has also retaliated with a statement where, through a spokesperson, the bank brushed off the claims as being unsubstantiated.
About Karl Heideck
Karl Heideck attained his Bachelor of Arts in English language and literature from Swarthmore College before he graduated with honors in 2009 from Temple University Beasley School of Law. Heideck is now an accomplished contract attorney and has been documented by Hire Counsel since April 2015. Karl Heideck had previously worked as a project attorney for Pepper Hamilton LLP where he acquired a lot of expertise. Presently, Karl Heideck is an attorney at Grant & Eisenhower PA law firm where he is involved in banking litigation and securities fraud with interest in liquidity, acquisitions and risk management.
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