Sacramento is suing Wells Fargo over discriminatory lending practices that illegally target communities of color.
The city, which filed a lawsuit in U.S. District Court on Friday, says the bank steered African-American and Latino borrowers toward risky and costlier home loans “even where those borrowers’ credit permitted them to obtain more advantageous loans," according to a statement.
Mayor Darrell Steinberg called discriminatory lending reprehensible. "[It] undermines the economic future we are fighting for in Sacramento,” he wrote in a statement.
The city accuses Wells Fargo of incentivizing "the marketing of the high-cost or high-risk loans to minorities." It claims that African-Americans were two times more likely to be sold one of these loans than a white borrower, and Latino customers 1.45 times more likely.
A loan in a community-of-color is 2.7 times more likely to wind up in foreclosure than in a white neighborhood, according to the city.
The bank allegedly marketed and directed black and Latino customers toward these riskier, pricier loans beginning in 2004 and continuing today.
Wells Fargo says that the city's allegations don't reflecty how it operates in communities. "Wells Fargo has been serving the Sacramento community for more than 160 years and we will vigorously defend our longstanding record of fair and responsible lending," a spokesperson wrote.
The city is asking for monetary damages, since it claims to have used other services to help communities impacted by the bank's alleged discriminatory lending.
“The City will do all in its power to protect our residents and neighborhoods from the impact of these practices," the mayor wrote.
Sacramento joins Miami, Philadelphia and several other local governments in challenging Wells Fargo's alleged discrimination.