Wells Fargo settles lending discrimination suit for $10M

Pat Loeb
December 16, 2019 - 11:57 am

UPDATED: 1:15 p.m.

PHILADELPHIA (KYW Newsradio) — The city of Philadelphia has settled a civil suit it filed against Wells Fargo Bank that alleged Black and Latino borrowers were steered to higher-interest loans. The bank will put $10 million into home-ownership programs for low- and moderate-income residents.

Wells Fargo admits no liability and still denies discrimination claims, but it has agreed to provide $8.5 million for down payment and closing cost assistance to low- and moderate- income home buyers, another $1 million to mortgage foreclosure prevention, and $500,000 for vacant land clean-up and similar programs.

"I think it's a great result," City Solicitor Marcel Pratt said. "We're providing benefits we couldn't get from a standard judgment in litigation."

Pratt says the city will collaborate with Wells Fargo to educate bank employees about the history of Philadelphia's housing market and neighborhoods.

"If a bank is going to do business here, they should know more about the very unique cultures in Philadelphia," he said. 

The suit — filed two and a half years ago — alleged that from 2004 to 2014, the bank was twice as likely to give riskier, more expensive loans to Black and Latino borrowers as to white borrowers, a violation of the Fair Housing Act known as "reverse redlining." It also charged that the bank then rejected applications to refinance the loans at a lower cost.

Mayor Jim Kenney says the settlement brings financial support to communities that need it most. Wells Fargo says it's pleased the settlement will provide real sustainable homeownership opportunities for many low- and moderate-income residents of Philadelphia.