It would appear that the large banking establishment known as Wells Fargo & Company is sitting in the hot seat. And, it is not for anything like opening new accounts in their customers’ names without telling them. Technically, the bank is not quite in the hot seat yet. But, news reports are releasing information that states the city of Philadelphia has a lawsuit filed that may make things just a bit uncomfortable for the institution. Not surprisingly, the bank denies the allegation. Either way, there is a lawsuit filed in the United States District Court for the Eastern District of Pennsylvania.
The nature of the allegation is a nasty bit of business practice, in deed. According to the city of Philadelphia, Wells Fargo Bank is in violation of the fair Housing Act of 1968. The lawsuit claims that the bank is guilty of leading African American and Hispanic borrowers into loans with higher interest rates when they qualified for lower rates mortgages due to their income. In addition to the act of financing high risk loans, the lawsuit also claims that the bank made the option of refinancing difficult for these particular borrowers. Looking over the numbers for more than a year, Philadelphia claims that African American and Hispanic borrowers were given loans with twice the interest rates of white borrowers, over the course of ten years. At the time, every borrower looked into for this comparison had a credit score of 660 or higher, which is not bad.
In essence, the city claims the bank is practicing “red lining”, which is not necessarily illegal if the action is not based on race. Because foreclosure rates are nearly five times higher in the African American and Hispanic neighborhoods than in their white counterparts, the case may have a leg to stand on in court. Although there is a PR (Public Relations) reaction form Well Fargo to the lawsuit, they have no legal recourse so far.
The legal details in case such as this is what Karl Heideck dreams about, and is the reason he graduated from Temple University Beasley School of Law. They are what he dreams about due to their effect on the rules and regulations of civil litigation, compliance and risk management. All of these elements are present in the lawsuit filed.
Another reason why this case holds an interest for Karl Heideck is that it involves his stomping grounds of Philadelphia. As a contract attorney for Hire Counsel, the city ought to get his opinion on the matter. He has more than a decade of practice on which to base any of his inferences.
Learn more about Karl Heideck: https://www.lawdeeda.com/profile/pennsylvania/philadelphia/19102/karl-heideck