Redlining is a form of discrimination sometimes practiced by lending institutions. The term refers to literally circling a neighborhood in red marking it as an area whose residents are to be denied credit. In and of itself, redlining is not illegal if it is not based on ethnicity.
In the case of the City of Philadelphia vs. Wells Fargo Bank the city alleges that Wells Fargo engaged in discriminatory lending practices. On May 15, 2017, the suit was filed with the U.S. District Court for the Eastern District of Pennsylvania. The City cited the 1968 Fair Housing Act as the basis for the suit.
The suit charges that despite having a credit rating that qualified them for mortgages with lower-risk and lower-interest Wells Fargo duped Hispanic and Black borrowers into taking out higher-risk mortgages.
Due diligence on the part of Philadelphia revealed that for a decade despite having at least a 660 FICO rating Hispanics were 1.7 times more likely to receive high-risk mortgages from Wells Fargo then were whites with the same credit score. African Americans with a least a 660 credit score were twice as likely to receive the higher risk mortgages than whites.
The riskier loans made it harder for minorities to refinance. In the suit, the City of Philadelphia claims that the consequences of Wells Fargo’s actions not only negatively impacted the borrower but their community as well. The foreclosure rate in largely minority communities was 4.7 times higher than in neighborhoods were whites compose the majority. The city maintains that the disparity in the number of foreclosures devastated minority communities.
Wells Fargo insists the city’s allegations are groundless. The company further denies any wrongdoing and maintains that their lending practices are fair and legal.
The City of Philadelphia is seeking unspecified monetary damages and an injunction against Wells Fargo’s alleged predatory lending practices.
Attorney Karl Heideck is an alumnus of both Swarthmore College and the Beasley School of Law at Temple Univerisity. He earned a Bachelor of Arts in the English language and writing from the former and a Juris Doctor from the latter. Karl Heideck graduated from Temple with honors.
Practicing in the Jenkintown area of Philadelphia Karl Heideck is skilled in 16 different aspects of the legal profession.
Karl Heideck’s Facebook Page: www.facebook.com/karl.heideck