MEMPHIS, TN (WMC-TV) - Memphis Mayor A C Wharton and Shelby County Mayor Joe Ford announced a lawsuit Wednesday against a company they claim is responsible for predatory lending in the Mid-South.
The mayors of Memphis and Shelby County say Wells Fargo Bank's predatory lending practices contributed to the tumble of the local housing industry.
"When a company like Wells Fargo engages in illegal practices, it causes a lot of foreclosures in a short period of time and the county loses a lot of money," Ford said.
The Fair Housing Act lawsuit alleges Wells Fargo pushed sub-prime loans on African Americans who qualified for better loans.
"They left the City of Memphis and Shelby County holding the bag and that's why we're here today," attorney John Relman said.
Relman is the Fair Housing attorney behind the City of Baltimore's lawsuit against Wells Fargo.
"When we see a foreclosure rate that is eight times higher in the minority community than in the white community, we know something is terribly wrong," he said.
Relman detailed what the suit alleges.
"Two ex-employees, whose testimony is in the complaint, tell us they deliberately steered people into sub-prime loans who qualifies for prime loans, which is good loans, because they could make more money," he said.
And minority churches were often the target.
"They targeted the zip codes," Relman said. "They targeted African American churches. They knew exactly what they were doing."
Marketing software to target people included.
Wharton had a warning for predatory lenders.
"If you come in here, you better come in here right because there's somebody looking at you," he said.
Wells Fargo released the following statement:
While we have not had an opportunity to review the specifics of the suit, the allegations referenced in earlier news reports about Wells Fargo's lending practices are baseless and inaccurate. Other courts have found similar suits against lenders to be without merit, and we are confident of a similar outcome here.
We believe communities are ultimately better served when elected officials and lenders work collaboratively to address the current economic issues facing our neighbors. To that end, we remain committed to our customers in Memphis and Shelby County, and proud of our lengthy record leading the industry in fair and responsible lending practices and in support of the communities we serve.