Tags: wells fargo | lending | lawsuits | predatory

Wells Fargo Wins Dismissal of Predatory Lending Lawsuits

Sunday, 19 Jul 2015 02:49 PM

Wells Fargo & Co. won the dismissal of two lawsuits on Friday that had accused the largest U.S. mortgage lender of violating the federal Fair Housing Act by engaging in predatory lending practices in Los Angeles and Chicago.

The lawsuits by the city of Los Angeles and by Cook County, Illinois, which includes Chicago, accused Wells Fargo of steering black and Hispanic borrowers into higher-cost loans, a process sometimes called "reverse redlining".

They said this resulted in higher foreclosures and lower property tax collections, and necessitated higher spending to combat urban blight. Los Angeles and Chicago are the second- and third-most populous U.S. cities.

"We are pleased with both decisions," Wells Fargo spokesman Ancel Martinez said. The San Francisco-based lender is also the fourth-largest U.S. bank by assets.

Several large U.S. cities and counties such as Baltimore, Cleveland, Memphis and Miami have accused banks of biased mortgage lending that prolonged the nation's housing crisis. Their lawsuits have had mixed success.

In the Los Angeles case, the city accused Wells Fargo of discriminatory lending dating to 2004.

U.S. District Judge Otis Wright, however, found no showing of FHA violations within the two-year statute of limitations period prior to the December 2013 lawsuit.

Wright also faulted Los Angeles's litigation strategy. He said the city failed to identify any Wells Fargo policy to steer minorities into costly loans, and instead the city objected to the bank's issuance of federally-insured loans that can help lower-income borrowers afford homes, despite their higher costs.

"In the name of advocating on behalf of minority borrowers, the city decided to fight for an outcome that would hurt those same borrowers," Wright wrote. "That decision is disheartening."

Meanwhile, in the Chicago case, U.S. District Judge Gary Feinerman said Congress did not authorize entities such as Cook County to pursue an FHA claim to begin with.

The county "alleges neither that it was denied a loan nor offered unfavorable terms - setting aside the obvious point that Cook County is not alleged to have a race or other protected trait," Feinerman wrote.

He said his decision did not mean that Wells Fargo complied with the FHA, or that "direct victims" of alleged abusive lending did not deserve compensation.

The office of Los Angeles City Attorney Mike Feuer did not immediately respond to requests for comment on Wright's decision. The Cook County State's Attorney's Office said it is reviewing Feinerman's decision.

© 2017 Thomson/Reuters. All rights reserved.

   
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Wells Fargo & Co. won the dismissal of two lawsuits on Friday that had accused the largest U.S. mortgage lender of violating the federal Fair Housing Act by engaging in predatory lending practices in Los Angeles and Chicago.
wells fargo, lending, lawsuits, predatory
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2015-49-19
Sunday, 19 Jul 2015 02:49 PM
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