The City of Philadelphia and Wells Fargo announced Monday they reached a “Collaboration Agreement” regarding a lawsuit the city brought against the bank in 2017. While Wells Fargo denies the city’s allegations that it violated the Fair Housing Act by discriminating against minorities in its mortgage lending division, the bank has agreed to contribute $10 million to housing-related programs in the city.
The lawsuit alleged Wells Fargo violated the Fair Housing Act from 2004 to 2014 by writing high-risk, high-interest loans to minority borrowers even when they qualified for more favorable loans. These loans later experienced a higher rate of foreclosures than other loans in the city, according to the lawsuit.
Wells Fargo “vigorously denied the allegations,” according to a statement released Monday from the Philadelphia mayor’s office.
In fact, Wells Fargo’s Region Bank President for Greater Philadelphia, Joe Kirk, stated with the Monday announcement, “Wells Fargo has been the largest provider of loans to help low- and moderate-income families in Philadelphia achieve the dream of homeownership, and our efforts have gone well beyond making loans.”
Kirk pointed out the bank has partnered with nonprofits in the city to provide more than $15 million to causes such as down payment assistance, local homebuying education, and more.
Philadelphia Solicitor Marcel S. Pratt said Monday, “The resolution will provide much needed benefits to the City’s low- and moderate-income residents—most significantly by enabling homeownership, which is one of the most effective ways that families can accumulate wealth in America.”
“One of the advantages of this resolution is that we secured valuable benefits that would not have been available through pursuing our litigation for City government’s injuries under the Fair Housing Act,” he added.
Philadelphia Mayor Jim Kenney said, “This agreement brings substantial support to the very communities that most need this assistance.”
The $10 million from Wells Fargo will not go to the city of Philadelphia but rather directly to nonprofits and grants for homeowners.
Most of the money—$8.5 million—will go to down payment and closing cost assistance for low- and moderate-income borrowers. The aid will be distributed by the Philadelphia Housing Development Corporation.
Then $1 million will go toward foreclosure prevention, and $500,000 will go to Philadelphia’s land care program to help clear and maintain vacant lots.
“The efforts funded through these grants are consistent with Wells Fargo’s broader philanthropic strategy, which includes a $1 billion commitment over the next six years to address the U.S. housing affordability crisis,” Kirk said.
In addition to the financial commitment, Pratt said, “We are also pleased that—beyond financial relief—the City and Wells Fargo will collaborate on a novel ‘Understanding Philadelphia’ program. Through the program, we hope to explore new ways to promote increased homeownership in Philadelphia and remove any impediments that exist.”