(Memphis) A lawsuit filed by Memphis and Shelby County against Wells Fargo has been dismissed, as the bank pledges millions of dollars to help Memphis recover from the housing crisis.
Wells Fargo will provide grants totaling $4.5 million for a homeownership program and $3 million for local initiatives. In addition, they pledge $425 million in mortgage lending over the next five years, $125 million of which will be dedicated to low- and moderate-income borrowers.
As part of the $4.5 million for a homeownership program, people with qualifying levels of income can receive $15,000 toward a down payment or renovation. For example, a family of four making less than $71,000 a year can apply for the program.
The prospective homebuyer must complete an eight-hour homebuyer education session with an approved non-profit organization. He will also have to agree to live in the home for five years. If he moves sooner, he will have to return a pro-rated portion of the down payment or renovation grant.
Meanwhile, the city and county will drop the lawsuit alleging Wells Fargo targeted minority communities for predatory lending practices, which resulted in high-risk subprime loans. That led to what city leaders described as a disproportionate number of foreclosures in those areas.
Memphis Mayor A C Wharton Jr. said, “There will be relief, direct and indirect.”
He added, “We feel the negotiations have been quite productive and accomplished what we wanted to accomplish by the lawsuit.”
Residents in Memphis like the idea of a program attracting homebuyers to the area. But they’re also skeptical of how the lawsuit was dropped.
“In a sense of justice, it probably works better for Wells Fargo than Memphis, would be my guess,” said Darrell Godwin. “It’s a big bank, and they can get away with things. And get things dismissed in lieu of this.”
At the same time, others see the benefit Memphians can receive by getting help in buying homes.
“It’s a $15,000 carrot to come find out what more they have to offer,” said Misty White. “If I could get $15,000 to fix up the house, I would try to buy a house, for sure. Because that’s just $15,000 more you have for your future.”
The homeownership program is modeled after the NeighborhoodLIFT program done in nine other U.S. cities. None of those other cities were involved in litigation against Wells Fargo.