Resource: Wells Fargo settlement: An important victory for minority homeowners, communities

By: Ray Brescia

June 28, 2012

During the height of the financial crisis, NOW on PBS highlighted the efforts of the city of Memphis in pursuing legal claims against Wells Fargo bank for some of its practices during the housing bubble. City officials argued that the bank’s mortgage practices were harmful to minority borrowers. Furthermore, they alleged that bank officials often steered minority borrowers to subprime loans when many would have qualified for loans on much better terms. These practices, they argued, led to foreclosures and price gouging that had a disproportionate impact on communities of color. For the city, this meant lost tax revenue and more funds spent on policing foreclosed homes that became a magnet for arson and vandalism. Whole neighborhoods were ravaged. On block after block, even homeowners without subprime loans saw their property values fall as foreclosure sales and abandoned properties dragged down home prices.

After the NOW ON PBS segment aired, Memphis and surrounding Shelby County filed a lawsuit in federal court alleging that Wells Fargo’s practices violated federal anti-discrimination law. Last month, the parties settled: the bank committed to investing more than $400 million in loans to spur economic development in a region hard hit by the recession.