Lieff Cabraser represented the City of Philadelphia in Fair Housing Act litigation against Wells Fargo that was successfully resolved in 2019 with a settlement wherein the bank paid $10 million to fund city programs for communities affected by lending discrimination as well as agreeing to other relief.
History of the Case
In 2017, Lieff Cabraser brought a class action lawsuit on behalf of the City of Philadelphia against Wells Fargo Bank accusing the lender of fraudulently deceiving mortgage customers facing bankruptcy with unauthorized loan changes that appeared to reduce payment amounts, but which did so at a cost of extending the home loans by decades. As a result of this predatory conduct, the borrowers would have monthly payments for far longer and would ultimately owe the bank much more money.
The loan changes came as a surprise to the borrowers, but the payment reductions — which when discovered seemed like a welcome respite to those facing financial hardship — had a disastrous price tag buried deep in the restructuring details that would keep borrowers indebted to the bank for vastly increased periods of time. As the complaint alleged, any change to a payment plan for a person in bankruptcy is subject to approval by the court and the other parties involved, but Wells Fargo put through radical changes to these home loans without such review or approval.
The bank claimed these allegedly unapproved loan modifications were part of a trial program seeking to help the borrowers remain in their homes, but critics note the changes put the home owners at much greater risk of defaulting, and were likely to leave the loan recipients prey to foreclosure at a future time, especially given the significant extensions of the overall loan period.