Wells Fargo Bank
The city of Baltimore, Maryland, is suing San Francisco-based Wells Fargo Bank in a class action suit for its predatory loan system to their poorest African American neighbourhoods, which led to a shocking series of foreclosures.
To cope with a destabilized community, the city is looking to recoup the losses from the social repercussions of the foreclosures. The problems faced are: as property prices drop with foreclosures, the city gets less tax revenue, plus vacant houses tend to attract fires and crime, so police costs shoot up.
The lawsuit claims that this bank especially targeted African American neighbourhoods to sell their high-risk loans. For homes that are worth less than $75,000 or less, the loan dictates higher interest rates that were loaded with fees and surcharges. Such unfair lending practices are against the federal Fair Housing Act.
In defense of their lending processes, Wells Fargo Bank reportedly claimed not to have discriminated against or treated any of their customers unfairly.
According to the lawsuit, Wells Fargo made 1,285 loans a year from 2000 to 2007, making revenues of more than $600 million. Wells Fargo had 135 more foreclosures than any other loan provider. About 60 per cent of its foreclosures happened to neighborhoods that are more than two thirds African American.
The city of Baltimore had more than 33,000 homes foreclosed since 2000 and 2007. The plaintiff also claims that this situation worsens the already impoverished communities and thwarts their efforts to improve them further.
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