Wednesday, January 17, 2018

discriminatory lending - Fair Housing Act - City of Phila. v. Wells Fargo

City of Phila. v. Wells Fargo – ED Pa. – Jan. 16, 2018


On May 15, 2017, Plaintiff City of Philadelphia filed its 52-page Complaint alleging one claim against Defendants Wells Fargo & Co., Inc. and Wells Fargo Bank, N.A. for violating the Fair Housing Act, 42 U.S.C. §§ 36-1, et seq. The Complaint accuses Wells Fargo of engaging in discriminatory mortgage-lending practices against African-American and Latino residents of Philadelphia. Wells Fargo’s alleged practices constitute “reverse redlining,” which involves targeting minorities and minority communities with exploitive loan products that have higher costs and worse terms than those offered to similarly situated white borrowers.  

Publicly available loan data has been analyzed by the City to indicate the existence of “at least 1,067 discriminatory high-cost or high-risk loans issued to minority borrowers by Wells Fargo in Philadelphia between 2004 and 2014 that resulted in foreclosure.”  These loans are concentrated in areas of the city that have high rates of poverty and significant AfricanAmerican and Latino populations.  According to the City, this practice has “continue[d] through the present and has not terminated.”

The City alleges disparate treatment and disparate impact as theories for its FHA claim, Compl. and based on those theories, the City alleges two types of injuries: non-economic and economic. For its non-economic injuries, the City alleges that Wells Fargo’s conduct negatively impacts the ability of minority residents to own homes in Philadelphia, which injures the City’s “longstanding and active interest in promoting fair housing and securing the benefits of an integrated community.”  The City alleges that it expends resources combating housing discrimination and that Wells Fargo’s actions have interfered with those efforts. For its economic injuries, the City alleges that the discriminatory loans issued by Wells Fargo cause increases in foreclosures that diminish the City’s tax revenues and increase its spending on municipal services.

To remedy its injuries, the City seeks injunctive relief and damages.  On July 21, 2017, Wells Fargo filed a motion to dismiss and a motion to strike.  On November 3, 2017, Wells Fargo filed a motion to stay and/or limit discovery.

I will deny all motions. The motion to dismiss and motion to stay and/or limit discovery are discussed below, and the motion to strike will be addressed in a separate order