Major bank sued over biased lending practices

by MPA01 Dec 2014
A Midwest county has filed a lawsuit against Wells Fargo, accusing the bank of predatory and discriminatory lending practices towards black, Hispanic and female borrowers in the Chicago area, according to Reuters.
According to a complaint filed in the U.S. District Court in Chicago, which is part of Cook County, the nation’s largest mortgage lender has discriminated against minority and female borrowers for more than a decade with the aim of recording higher earnings.
The complaint also stated Wells Fargo was engaged in a practice called "equity stripping.” The practice is a type of foreclosure rescue scheme and involves overcharging fees and interest rates along with refinancing penalties.
A Wells Fargo’s spokesperson told Reuters, that such allegations are “baseless” and the bank aims to defend itself. He commented, “It’s disappointing they chose to pursue a lawsuit against Wells Fargo rather than collaborate together to help borrowers and home owners in the county.”
The lawsuit is the latest in accusing a major bank of discriminatory lending practices. In June, the city of Los Angeles filed suit against JPMorgan Chase, accusing the lender of steering minority borrowers into risky home loans they couldn't afford. Citigroup and Bank of America Corp. have also been sued for discrimination in lending practices.
In October, the U.S. Department of Housing and Urban Development reached a $5 million settlement with Wells Fargo Home Mortgage, resolving allegations that the lender discriminated against women who were pregnant or had recently given birth and were on maternity leave.
Late last year, a Deutsche Bank subsidiary agreed to pay more than $12 million to settle allegations that it discriminated against African American and Hispanic borrowers. HUD had alleged that MortgageIT’s practices resulted in minority borrowers being charged higher annual percentage rates and fees than similarly qualified white borrowers.


Should CFPB have more supervision over credit agencies?