Wells Fargo will pay $10 million to the city of Philadelphia to settle a lawsuit that accused the bank of participating in discriminatory lending practices against black people and other minorities.
The lawsuit alleged that Philadelphia suffered economic damages due to Wells Fargo’s long standing practice of intentionally steering minority borrowers in Philadelphia into mortgage loans with higher costs and risks compared to mortgage loans for white borrowers.
The suit also claimed that Wells Fargo had a policy that didn’t extend credit to minority borrowers seeking to refinance their loans while offering those opportunities to white borrowers.
Under the settlement, Wells Fargo will set aside $8.5 million for low and moderate income homebuyers to help with down payments and closing costs. Three non-profits will share $1 million to implement the city’s Residential Mortgage Foreclosure Program, and the city will use $500,000 for its land care program to repair and maintain its vacant lots.
Wells Fargo and the city of Philadelphia will also collaborate a program for the bank’s employees to educate them about the city’s diversity, history of its housing market and current housing needs.
Mayor Jim Kenney supported the settlement, saying that low-income Philadelphians must be assured they face a level playing field as they look to buy a home.
“This agreement brings substantial support to the very communities that most need this assistance,” the mayor said in the released statement. “Philadelphia is committed to ensuring that no one faces additional hurdles toward home ownership because of their race or ethnicity.”
Marcel Pratt, the city’s commissioner, said the settlement brings many benefits to communities of color.
“Our focus has been on directing relief to the neighborhoods that were the subject of the litigation, which were communities of color that continue to face challenges,” Pratt’s statement reads. “One of the advantages of this resolution is that we secured valuable benefits that would not have been available through pursuing our litigation.”
Joe Kirk, Wells Fargo Region Bank President for Greater Philadelphia, said that the settlement was part of the bank’s long-term commitment to bring light to the country’s affordable housing crisis.
“We’re pleased that we’ve been able to resolve this matter in a way that will provide real, tangible sustainable homeownership opportunities for many low- and moderate-income residents of Philadelphia,” Kirk said.