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Lawsuits Stacking Up: Wells Fargo Gets Sued Again for Discrimination Against Black Borrowers

Wells Fargo was hit with a class-action race discrimination class action on Feb. 17 in California Northern District Court. 

The suit was filed just as another lawsuit against Wells Fargo for alleged discriminatory lending was dismissed by a federal judge.

On Feb. 23, a lawsuit the California city of Sacramento filed against Wells Fargo in February 2018 over alleged discriminatory lending is ending without compensation to the city or to people who purchased homes with expensive and risky loans. A federal judge dismissed the case, The Sacramento Bee reported. The city sued the bank in the U.S. District Court in Sacramento, alleging that Wells Fargo had steered Black and Latino home buyers toward higher cost or higher risk loans, and that the homeowners subsequently lost their houses to foreclosure at a higher rate. Additionally, Sacramento alleged the bank refused to extend credit to non-white borrowers looking to refinance “previously issued unnecessarily expensive loans.”

The latest suit was filed by Stowell & Friedman and Sani Law on behalf of Black home loan applicants and accuses Wells Fargo of discriminatory residential mortgage policies and practices. According to court documents, the banking giant intentionally uses factors in evaluating home loan rates that have a disparate impact on Black borrowers.

Williams v. Wells Fargo Bank, headquartered in San Francisco, was brought by banking customer Christopher Williams, who is African-American. The suit claims the bank discriminated against African-American borrowers, such as Williams, through its mortgage origination and underwriting practices.

The lawsuit seeks unspecified damages for four counts of race discrimination and violation of the Equal Credit Opportunity Act.

Williams alleges Wells Fargo denied him a prime interest rate despite his being well-qualified and referred to a 2019 letter from the bank claiming it used a “unique scoring model” beyond credit scores to evaluate applications. 

“The ‘other’ factors used by Wells Fargo to determine interest rates for home loans serve to intentionally exclude Black or African American borrowers from affordable and lower-risk loans, force African-American borrowers to pay higher interest rates and other fees than similarly situated white borrowers, and have a disparate impact based on race,” the suit states.

According to Williams, he had a FICO score of over 750 at the unspecified time of his mortgage application, and said Wells Fargo offered him an unspecified interest rate nearly three points higher than the prime rate he sought, National Mortgage News reported.

Williams, a Georgia resident, said he also identified his race during the application process, and then he asked Wells Fargo to recheck his credit report. The bank, he says, refused. In September 2019 he received a letter from the bank, in which it allegedly cited its “unique scoring model” considering factors beyond credit scores for applications. 

Williams went on to secure a mortgage with a prime interest rate from another unnamed bank.

This isn’t the first lawsuit against Wells Fargo for discriminatory practices such as “reverse redlining” or charging higher rates and imposing less favorable terms for Black borrowers. In 2013, the bank made a nine-figure settlement over a U.S. Department of Justice discrimination suit regarding Black and Hispanic borrowers. In 2019, the bank settled a similar case with the city of Philadelphia for $10 million.

Williams’ lawsuit has an April deadline for mediation and discussion deadlines. The first hearing is set for May.

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