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Pennsylvania Human Relations Commission Files Lawsuit Against Wells Fargo for Reverse Redlining Philadelphia's Neighborhoods
Submitted by Dan U-A on Tue, 07/27/2010 - 12:37pm.
In case you have not seen it, the Pennsylvania Human Relations Commission (PHRC) has filed suit against Wells Fargo Bank. The PHRC, which is responsible for enforcing Pennsylvania's anti-discrimination laws, has alleged that Wells Fargo systematically 'reverse redlined' Philadelphia neighborhoods, by concentrating expensive, abusive loans in Philadelphia neighborhoods that have a high percentage of African-American residents.
Among other things, the Complaint alleges that:
- Respondents underwrite adjustable rate loans for African Americans and Philadelphia’s African American neighborhoods that those borrowers cannot afford.
- Respondents’ pricing sheets show that it targets homes that are more likely to be located in African American neighborhoods for an interest rate increase, and lowers rates for homes that are disproportionately located in white neighborhoods.
- Respondents originate unfair and predatory mortgage loans to African Americans and African American neighborhoods in Philadelphia.
- Publicly available Home Mortgage Disclosure Act data shows that respondents’ high-cost loans are disproportionately provided to African Americans and are located in African American neighborhoods in Philadelphia
- Respondents’ loan officers were given substantial discretion to increase the costliness of mortgage loans and they regularly used this discretion at the expense of African Americans borrowers and borrowers in African American neighborhoods.
This is, of course, a very big deal, and my guess is that will be hearing a lot more about it in the coming months.
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This is really exciting and important
It's great to hear that our state's HRC has taken on predatory lending practices as a civil rights issue.
Baltimore, with the Relman civil rights firm, has been actively litigating against Wells Fargo in the face of blight infecting Baltimore neighborhoods as concentrated clusters of houses fall into foreclosure.
Memphis has also sued, and a House subcommittee recently met there to take testimony on the civil rights implications of lending practices that target minorities for destructive subprime loans. With this suit, PA is poised to break new ground and hopefully secure future protections to prevent similar practices during the next credit upturn.