Home music industry LA lawsuit accusing Wells Fargo of predatory mortgage practices dismissed

LA lawsuit accusing Wells Fargo of predatory mortgage practices dismissed



A federal judge has dismissed a City of Los Angeles lawsuit accusing Wells Fargo & Co. of violating federal fair housing law by engaging in predatory mortgage lending practices targeting minority borrowers.

In a 28-page ruling on Friday, U.S. District Judge Otis Wright II said “undisputed facts” showed Wells Fargo, the nation’s largest mortgage lender, had not broken the law for the two years during which the limitation period applied.

Part of the city’s lawsuit has focused on minority borrowers who are found more frequently than whites in Federal Housing Administration loans, which cater to both novice and marginal borrowers.

FHA loans carry low down payments and are easier to qualify. But they are often more expensive than conventional mortgages because they require higher mortgage insurance costs.

Wright said the FHA loans were intended to overcome precisely the barriers to homeownership often encountered by minorities.

“The city is not a champion of minority rights as it stated in the complaint,” Wright said. “While this case began with allegations that Wells Fargo violated minority rights, it ends with the city’s unsuccessful attempt to engage in exactly the same behavior. “

A lawsuit filed by Cook County, Ill. Over similar issues in Chicago was also dismissed on Friday.

Atty of the city of Los Angeles. Michael N. Feuer sued the Bank of San Francisco in December 2013, alleging a “continuing pattern and practice” of mortgage discrimination that led to a wave of foreclosures, reduced property tax revenues and increased costs municipal services.

The city cited a report by low-income advocacy groups that said the mortgage crisis resulted in 200,000 foreclosures in Los Angeles from 2008 to 2012, a wave that lowered property values ​​and plummeted. the city’s property tax revenue of $ 481 million.

In addition, local government costs for safety inspections, police and fire calls, garbage removal and property maintenance for these foreclosures have reached approximately $ 1.2 billion, according to California. Reinvestment Coalition and the Alliance of Californians for Community Empowerment.

Neither Feuer nor a spokesperson for him could be reached for comment.

Wells Fargo spokesman Ancel Martinez said the bank, which had firmly denied the wrongdoing, was happy with the decision.

The lawsuit was part of a series of federal civil actions Feuer brought against the nation’s largest banks in late 2013 and 2014 to deal with what he called “the devastating consequences of the crisis. lockdown in the second largest city in the United States ”.

Feuer’s lawsuits also accused JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. from engaging in predatory lending and redlining 11 years ago.

Specifically, he accused the four banks of placing minority borrowers in riskier loans than they did for “similarly situated” white borrowers. These loans have caused a disproportionate number of foreclosures in minority neighborhoods compared to white neighborhoods, according to the city.

When the housing market collapsed, banks then cut credit to minority borrowers on the basis of racial discrimination, according to the lawsuits. If the banks lent to minorities, they continued to do so “on predatory terms”, allege the lawsuits.

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In May, however, a federal judge dismissed the case against BofA, saying the city had not produced evidence of damage and that its legal theories were “not supported by any legal precedent.” Feuer appealed the decision.

Earlier this year, Feuer’s office filed separate lawsuits against Wells, JPMorgan, BofA and Citigroup in Los Angeles County Superior Court, alleging similar discriminatory lending practices. The pending cases have been grouped together in the court proceedings for complex disputes.

Separately, Feuer sued Wells Fargo in early May over allegations that its rigid sales quotas led employees to open unauthorized accounts for customers, imposing bribes and damaging their credit. This lawsuit echoes a 2013 Los Angeles Times investigation into the bank’s practices.

Wells denied the allegations, attributing the problems to a few dishonest employees, whom the bank sanctioned or fired.

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