Memphis Accuses Wells Fargo of Discriminating Against Blacks

The mayor of Memphis, A C Wharton Jr., has walked with bile rising in his throat through the streets of Hickory Hill and Orange Mound and Whitehaven in recent years, as house after house in those black neighborhoods has fallen into foreclosure.

On Wednesday, Mr. Wharton and other city and county officials filed a lawsuit accusing one of the nation’s largest banks, Wells Fargo, of singling out black homeowners for high-interest subprime mortgages.

The lawsuit, filed in federal court in Tennessee, marshaled a raft of statistics to argue that Wells Fargo offered one lending reality for whites and another for blacks. In Shelby County, which includes Memphis, one of every eight Wells Fargo loans in predominantly black neighborhoods resulted in foreclosure, compared with only one in 59 such loans in white neighborhoods, the lawsuit said.

Such charges, if proven, amount to reverse redlining — marketing expensive loan products specifically to black customers.

“You drive through our neighborhoods and it’s just palpable — you can see a strong emerging black homeowning community that’s gone,” Mr. Wharton said in an interview. “The clarity of the patterns just stand out like a sore thumb.”

The lawsuit is one of several discrimination suits filed against Wells Fargo in the past two years, as city and state officials argue that the bank must take responsibility for the social and economic effects of a decade of loose — some federal agencies have argued irresponsible — lending practices. In Baltimore, officials say that Wells Fargo’s lending practices tipped hundreds of homeowners into foreclosure and cost the city millions of dollars in taxes.

Lawyers for the City of Baltimore produced two former loan officers who described a pattern of discriminatory practices aimed at persuading blacks to take out what the officers called “ghetto loans,” high-interest mortgages. Their affidavits are also cited in the Memphis suit.

Last summer, the Illinois attorney general, Lisa Madigan, started a lawsuit accusing Wells Fargo of marketing high-cost mortgage loans to black and Latino customers while selling lower-cost loans to white borrowers with similar incomes.

The cumulative effect, Ms. Madigan argued, was to turn the black and Latino neighborhoods of the nation’s cities “into ground zero for subprime lending.”
Read on from the NY Times.