A federal judge in Philadelphia yesterday rejected Wells Fargo & Co.’s bid to dismiss that city’s lawsuit accusing the largest U.S. mortgage lender of predatory lending targeting black and Hispanic borrowers, Reuters reported. U.S. District Judge Anita Brody said Philadelphia may pursue claims that the bank’s alleged “reverse redlining” violated the federal Fair Housing Act, though she had “serious concerns” about whether claims of economic harm could survive. The lawsuit is one of several against big lenders by major U.S. cities claiming that mortgage lending discrimination causes more defaults by minority borrowers, lower property tax revenue, and higher costs to combat crime and blight. Philadelphia accused Wells Fargo of having since 2004 steered minority borrowers into higher-cost, higher-risk loans than white borrowers, even if they qualified for safer loans.
