Wells Fargo targeted minorities with predatory lending -- lawsuit

by Ryan Smith29 May 2014
A judge has nixed Wells Fargo’s motion to throw out a suit accusing it of predatory lending.

The lawsuit, filed by the city of Los Angeles, accuses the bank of engaging in predatory lending practices that targeted minority borrowers, leading to the loss of property tax revenue, according to a Reuters report.

The city’s attorneys allege that Wells Fargo has targeted minority borrowers since at least 2004, making loans the borrowers couldn’t afford to repay. The practice allegedly led to a disproportionate spike in foreclosures.

The city’s complain against Wells quotes former bank employees who said that predatory loans were specifically targeted to minorities and minority communities in LA, Reuters reported. The lawsuit also alleged that some borrowers were denied credit based on their race.

Wells Fargo, meanwhile, says it will defend what it called its efforts to expand home ownership in distressed neighborhoods.

“The court’s decision to allow the city attorney’s lawsuit to proceed, while disappointing, in no way suggests that the claims ultimately will prevail,” Wells spokesman Gary Kishner told Reuters.

LA has also filed suit against Citigroup, again alleging discriminatory lending. The city also filed a federal lawsuit against Bank of America last year.
 

COMMENTS

  • by Dominick F Sammarone | 5/29/2014 10:38:55 AM

    Not a good time to be in the mortgage business…

  • by 35yearmortgagerep | 5/29/2014 10:56:06 AM

    These financial institutions are in a no win situation with these types of lawsuits. As the article points out - If they don't make a mortgage to a minority then they are discriminating against the borrower and then if they do make a mortgage to a minority borrower and the borrower doesn't pay as agreed, they are then sued for making a mortgage to a minority who couldn't afford to pay the mortgage. I was personally working for Wells when ACORN was storming our branch offices, going through the office intimidating the office staff and demanding Wells make mortgages in the minority community.

  • by Elena N. | 5/29/2014 11:09:08 AM

    Congress has put and is still putting the pressure on the Banks to lend to minority borrowers using the Community Reinvestment Act.
    This is a no win for banks as they are being assaulted by all angles of our city, state, and federal govt.

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