As explained by Philadelphia litigation attorney Karl Heideck, the City of Philadelphia has filed a civil complaint against banking-giant Wells Fargo, alleging violations of the Fair Housing Act of 1968. The complaint stems from predatory lending practices targeting minority-mortgage borrowers. The complaint alleges that Wells Fargo steered minority-mortgage applicants into higher-interest and higher-risk loans compared to white borrowers with similar credit profiles. In addition, Wells Fargo created barriers for minority-mortgage holders attempting to refinance into less costly loans. This practice, the city contends, resulted in drastically higher foreclosure rates in minority neighborhoods that blighted much of the city. The city alleges Wells Fargo’s conduct caused it harm by lowering property values and increasing crime and vandalism in affected neighborhoods.
Philadelphia’s lawsuit comes two weeks after the U.S. Supreme Court ruled that the City of Miami could sue the Bank of America and Wells Fargo under the Fair Housing Act. The Court ruled that cities have standing to sue banks if they can demonstrate a causal link between predatory lending practices and harm to their cities. The process of refusing to extend credit to credit-worthy borrowers because of their race or the racial makeup of a neighborhood is called redlining and prohibited by law. Through a spokesperson, Wells Fargo denies redlining and claims it has treated Philadelphia borrowers fairly over its 140-year history. The bank has yet to file a formal response to the lawsuit.
Karl Heideck is an attorney with the firm Grant & Eisenhower PA, where he focuses on discovery for bank-litigation and securities-fraud cases. Employed with the firm since 2009, Karl Heideck is experienced with cases involving liquidity, risk management, acquisitions, and transactions related to the 2008 mortgage crisis. He works with clients throughout the Philadelphia region in civil litigation and risk management.Karl Heideck is a 2009 graduate of Temple University Beasley School of Law, where he earned a Juris Doctorate with honors. Mr. Heideck is a 2003 graduate of Swarthmore College with a B.A. in English language and literature. General Article.