Wells Fargo sued over alleged modern-day redlining practices

It says claim reflects the bank's "sordid history of racial bias"

A Black homeowner has filed a class-action lawsuit against Wells Fargo Bank and Wells Fargo Home Mortgage for their “discriminatory modern-day redlining practices.”

The federal lawsuit was filed by Los Angeles-based litigation firm Ellis George Cipollone O’Brien Annaguey on behalf of Aaron Braxton, who alleges he was a victim of Wells Fargo’s discriminatory refinancing practices against Black borrowers. Braxton is a Black playwright and teacher who purchased his home in 2000 in the South Los Angeles area with a Wells Fargo home mortgage backed by the Federal Housing Administration.

The complaint, filed in a federal court in California, accuses the bank of preventing Black homeowners like Braxton from refinancing by dragging out loan processing times, forcing him into an unsolicited debt-trap deferred payment program without his consent, denying his full request before finally granting him an above-market interest rate nearly a year and a half later.

Such discriminatory practices, the litigation firm asserted, is a “modern form of redlining or refusal to insure mortgages in and near Black neighborhoods, delay and/or denial to refinance loans at lower interest rates for Black homeowners, and the high rate of rejection of credit applications from qualified Black Americans through automated algorithms and machine learning systems.”

“Reflecting its sordid history of racial bias, Wells Fargo reached this disproportionate level purposefully,” said Dennis Ellis, lead counsel for the individual plaintiff and the proposed class. “It did so through its brazen use of multiple intentionally discriminatory algorithms and other race-driven lending practices, the disparate impact of which it either promoted or chose to ignore.”

A recent Bloomberg investigation found that Wells Fargo approved only 47% of Black applicants for refinancing in 2021, compared with 79% of White borrowers. On average, other banks accepted 71% of Black applicants. The refinancing disparities have forced Black homeowners to pay more than non-Black homeowners, resulting in foreclosure in many cases, alleges the lawsuit.

“The disproportionate number of Black applicants that were denied refinancing by Wells Fargo is staggering, especially when compared with those who were approved by other banks,” Ellis said. The counts against the home lender include the violation of the Equal Credit Opportunity Act, race discrimination in violation of the Fair Housing Act of 1968, and violation of the Unruh Civil Rights Act, among others.