- 14 Aug
Wells Fargo Seeks to Dismiss Discriminatory Lending Lawsuit in Philadelphia
The company Wells Fargo is moving to dismiss the lawsuit against it by the city of Philadelphia, stating that the allegations in the suit are too much of a stretch to prove in court. The lawsuit is one of the first of its kind in the country, as the U.S. Supreme Court only recently allowed cities to sue lending company for damages.
The lawsuit began in May, when Philadelphia government lawyers sued Wells Fargo, saying that the bank violated the Fair Housing Act and targeted minority borrowers with high-risk loans. This came after the May 1 ruling by the Supreme Court for similar cases Bank of America v. City of Miami and Wells Fargo v. City of Miami. Those cases established that cities have potential legal standing to sue banks over discriminatory lending. However, the Supreme Court verdict created a high burden of proof that cities must fulfill when pursuing these types of lawsuits.
As part of their motion to dismiss, Wells Fargo states that the city of Philadelphia will be unable to prove a direct link between Well Fargo’s practices and any loss in revenue the city may have incurred. The original suit by the city focuses on lending that happened between 2004 and 2014, stating that discriminatory lending led to high foreclosure rates and lowered taxes that the city may otherwise had collected. However, the Supreme Court decision required six steps to take place in order to establish a connection between loan practices and injuries, including “instances of blight and crime at foreclosed properties because of vacancies that caused the city to spend money on services that otherwise would not have been spent.”
Wells Fargo’s motion goes on to contend that since the city of Philadelphia did not tie property tax revenues to actual values and didn’t have annual assessments until 2014, there would not be proof of a loss of revenue being directly tied to housing in the area.
The suit is currently waiting at the U.S. District Court for the Eastern District of Pennsylvania. While the case in Philadelphia is the first of its kind to move forward since the Supreme Court decision, similar lawsuits have sprung up in Baltimore and Memphis. Outlets reported that the cases in those two cities were settled outside of a courtroom.
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