Memphis Drops Suit With $7.5M Agreement From Wells Fargo

After ""filing suit"":http://www.cityofmemphis.org/pdf_forms/lawsuit.pdf in January 2010 for predatory lending practices, the city of Memphis, Tennessee, and Shelby County have dropped charges against mortgage giant ""Wells Fargo."":https://www.wellsfargo.com/ The two parties reached an ""agreement"":https://www.wellsfargo.com/press/2012/20120529_MillionsofDollarsHeadedtoMemphis that requires Wells Fargo to commit $7.5 million to homeownership initiatives in Memphis and Shelby County.

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Of the total, $4.5 million will go to down payment and home renovation assistance in amounts up to $15,000 for qualifying families and individuals.

The remaining $3 million will go to the city of Memphis and Shelby County to be distributed to local programs promoting economic stability, financial literacy, and public safety.

Those with incomes not exceeding 120 percent of the median income in Memphis and Shelby County are eligible for grants.

Grant recipients will be required to attend an eight-hour homebuyer education session and must live in the newly-purchased home for at least five years.

If a grant recipient moves before the five-year minimum, he or she must repay the pro-rated portion of the grant for the amount of time left.

""We're glad that Wells Fargo decided to engage in a dialogue that led to this collaboration,"" said Shelby County Mayor Mark Luttrell.

The lawsuit that led to the agreement alleged ""that Wells Fargo

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targeted minority communities for predatory practices that have resulted in a disproportionate and unnecessary number of foreclosures in these communities,"" according to the ""court filing."":http://www.cityofmemphis.org/pdf_forms/lawsuit.pdf

The document cited statistics to support its claim, stating that ""[o]ne out of eight Wells Fargo loans in the County's predominantly African-American neighborhoods results in foreclosure, but the same is true for only one in fifty-nine loans in its predominantly white neighborhoods.""

Furthermore, 43.2 percent of the bank's foreclosures took place in neighborhoods with predominately African-American residents, while only 15.1 percent of its loans were located in these neighborhoods, according to the court filing.

Wells Fargo continues to deny these claims but ultimately decided ""it was in the best interests of everyone involved to work together rather than to continue to be involved in a protracted legal fight,"" said Leigh Collier, Wells Fargo regional president for the Mid-South.

""The investment we're announcing in Memphis and Shelby County today continues our ongoing commitment to helping communities succeed across the country,"" Collier added.

Wells Fargo will kick off its homeownership program in the Memphis area later this year. The program is modeled after another program the bank has initiated so far in five cities, NeighborhoodLIFT.

NeighborhoodLIFT is a collaboration between Wells Fargo and NeighborWorks America, a nonprofit organization that provides housing counseling and education services. The program provides grants similar to the ones Wells Fargo will now be offering in the Memphis area.

Having launched earlier this year, NeighborhoodLIFT has provided grants for 1,400 qualifying prospective homebuyers and has spent $79 million in home buying assistance and education, according to a spokesperson for Wells Fargo.

Wells Fargo will host an educational event to kick off the Memphis program later this year. ""Anyone is welcome to attend,"" stated the Wells Fargo spokesperson.

""You don't have to get your mortgage through Wells Fargo"" to participate, she added.