Wells Fargo sued by black borrower to refinance ‘Redlining’
(Bloomberg) – Wells Fargo & Co. has been sued for discriminating against black homeowners by relying on a modernized version of “redlining” that would have denied them lower interest rates by refinancing and would have forced to pay more for loans.
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The lawsuit, filed Friday in federal court in San Francisco as a proposed class action, argues that the practices in many cases have pushed black homeowners into foreclosure. Historically, redlining referred to the Federal Housing Administration’s refusal to insure mortgages in and near black neighborhoods, and agreements that blocked or restricted home sales to black Americans.
“Federal data shows that over the past few years, thousands of black homeowners have been unable to maintain the dream of homeownership due to Wells Fargo’s modern and discriminatory ‘redlining’ practices,” according to the complaint.
Wells Fargo had no immediate comment on the lawsuit.
The complaint cites earlier Bloomberg News reports showing Wells Fargo rejected a disproportionate number of refinance requests from black homeowners in 2020 when the pandemic sparked a rush to lock in lower rates.
Read more: Wells Fargo rejected half of its black applicants in mortgage refinance boom
Following the report, U.S. Senate Banking Committee Chairman Sherrod Brown, a Democrat from Ohio, and other Democratic senators this week called on regulators to investigate Wells Fargo’s treatment of black homeowners seeking to refinance mortgages during the pandemic.
Citing data from 8 million refinance applications from 2020, the lawsuit says Wells Fargo was more likely to approve refinance applications from white borrowers earning between $0 and $63,000 per year than from black applicants earning between $120,000 and $168,000 per year.
“Black applicants are further subject to delays, feigned errors and other hurdles, leading many Black Americans to withdraw their refinancing applications and leading others to wait indefinitely while Wells Fargo refuses to comply with their requests,” according to the complaint.
The lawsuit alleges violations of federal fair credit and housing laws, U.S. and California civil rights laws, and California’s unfair competition law.
The case is Braxton v. Wells Fargo, 22-cv-1748, US District Court, Northern District of California (San Francisco).
(Updates with Proposed Class Action Status and Legal Claims)
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