The City of Philadelphia is suing Wells Fargo for predatory lending tactics. The city is alleging that between 2004 and 2014, the bank gave riskier high-interest loans to minorities who qualified for better rates. This practice is in violation of the Fair Housing Act of 1968, and the city’s lawsuit alleges that the use of this practice caused economic damage to minority neighborhoods and the city as a whole.
An investigation by the City of Philadelphia turned up data that indicates black and Hispanic borrowers were nearly two times as likely to get higher risk loans as white borrowers with equal or similar credit scores, according to legal professional and litigation attorney Karl Heideck. Heideck also indicated that because of this practice, homes in minority neighborhoods were 4.7 times more likely to foreclose than homes in white neighborhoods.
Philadelphia filed its lawsuit in the U.S. District Court for the Eastern District of Pennsylvania on May 15, just two weeks after the U.S. Supreme Court ruled that cities can sue banks for predatory loan practices aimed at minorities. The lawsuit alleges that Wells Fargo’s discriminatory practices hurt the city because of the foreclosures it caused, and the subsequent lower property values and increased crime rates.
Through a spokesperson, Wells Fargo has released a statement that denies the allegations and claims that they use “responsible and fair lending practices,” according to Karl Heideck.
Karl Heideck is a contract attorney who practices law in the Greater Philadelphia Area. Karl received his Bachelor of Arts from Swarthmore College with honors in English Language and Literature. He received his Doctorate from Temple University’s James E. Beasley School of Law.
Karl Heideck worked as a project attorney at Pepper Hamilton, LLP, and as an associate at Conrad O’Brien. As an attorney at Grant & Eisenhower PA, Karl currently focuses on civil litigation and compliance and risk management.