Wells Fargo & Co. was sued for discriminating against Black homeowners by relying on a modernized version of “redlining” that allegedly denied them lower interest rates through refinancing and forced them to pay more for loans.
The lawsuit, filed Friday in federal court in San Francisco as a proposed class action, argues that the practices in many cases 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 the sales of homes to Black Americans.
“Federal data shows that over the last several years thousands of Black homeowners have been unable to maintain the dream of home ownership because of Wells Fargo’s ongoing and discriminatory modern day ‘redlining’ practices,” according to the complaint.
Wells Fargo had no immediate comment on the suit.
The complaint cites previous reporting by Bloomberg News showing that Wells Fargo rejected a disproportionate number of Black homeowners’ refinancing applications in 2020 when the pandemic set off a rush to lock in lower rates.
Following the news report, U.S. Senate Banking Committee Chair Sherrod Brown, an Ohio Democrat, and other Democratic senators this week called for regulators to investigate Wells Fargo’s treatment of Black homeowners seeking to refinance mortgages during the pandemic.
Citing data from 8 million refinancing applications from 2020, the lawsuit says Wells Fargo was more likely to approve refinancing applications from White borrowers earning between $0 and $63,000 annually than it was for Black applicants earning between $120,000 and $168,000 annually.
“Black applicants are further subjected to delays, feigned mistakes, and other obstacles, leading many Black Americans to withdraw their requests for refinancing, and leading others to wait indefinitely while Wells Fargo refuses to act upon their applications,” according to the complaint.
The suit alleges violations of federal fair credit and housing laws, U.S. and California civil rights statutes, as well as California’s unfair competition law.
