Illinois AG Sues Wells on Alleged Reverse Redlining

The Housing Wire reports:

The Illinois AG’s suit, filed in Cook County Circuit Court, claims Wells engaged in a practice called “reverse redlining,” in which lenders are said to target minority consumers or residents of minority neighborhoods for high-cost subprime mortgages. Madigan’s complaint alleges Wells targeted marketing programs in areas considered minority-populated.

In 2005, according to an analysis of Chicago-area data, approximately 45% of Wells’ African American borrowers and 23% of the lender’s Latino borrowers received a high-cost mortgage, compared with 11% of white borrowers that received high-cost mortgages that year. In 2006, 58.5% of its African American and 35% of its Latino borrowers received high cost mortgages, compared with 16% of its white borrowers.

What's a bank supposed to do? Don't make loans, bad. Make loans, bad.