As explained by attorney Karl Heideck, a lawsuit has been filed against Wells Fargo by the City of Philadelphia. The complaint claims that discriminatory practices were being used in direct opposition to the Fair Housing Act, and that predatory lending techniques were specifically targeting minority mortgage borrowers. Wells Fargo denies these claims, arguing that their lending protocol has always been fair and that the allegations do not hold weight. Unfortunately for bank, this has befallen them as they are recovering from a scandalous ordeal that revealed some of its bankers had opened fake accounts in customers’ names.According to the city, Wells Fargo trapped African American and Hispanic borrowers in risky, high-interest loans, even though their credit qualified them for lower-interest, less risky loans. Therefore, many of the alleged victims had trouble keeping up with the payments and then had tremendous difficulty refinancing. Most of them, the City says, were forced into foreclosure in much higher numbers than whites.
When the math of Wells Fargo was looked at closely over a decade of time, it was found that black borrowers were twice as likely to receive higher interest loans, and Hispanics 1.7 times more likely, than white borrowers. The complaint alleges, this was the case even though all had similar FICO scores. Because of the trouble minorities found themselves trapped in, the city says it caused extreme hardship on minority neighborhoods resulting in foreclosures tainting the landscape and lowering property values. The City’s lawyers are seeking an undisclosed amount of monetary damages as well as a ban on Wells Fargo continuing predatory lending practices.
Karl Heideck is a practicing lawyer in Philadelphia, and works for the law firm Grant & Eisenhower where he spends much time researching profound cases such as this. He is specifically interested in cases of mortgage fraud, and has intensely studied fallout from the mortgage crises of 2008 that left many destitute and weighed down with burdens of homelessness, liquidity, acquisition, risk and transaction issues.Heideck graduated Temple University Beasley School of Law in 2009 with honors and a Juris Doctor degree. He also earned a Bachelor of Arts in English and Literature from Swarthmore College, as well. He has chosen to use his expertise to help clients with civil litigation, risk management and compliance issues throughout Philadelphia. Learn More.