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Wells Fargo predatory loan lawsuit cleared

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A federal judge has ruled that legal action against Wells Fargo & Co. can continue.

The lawsuit accuses the third largest US bank of predatory mortgages targeting black and Hispanic borrowers in the Chicago area.

According to ReutersU.S. District Judge Gary Feinerman ruled that Cook County of Illinois could pursue its federal fair housing law claims against Wells Fargo, but only to a limited extent.

While the lawsuit may focus on the bank’s alleged “capital stripping” practices, claims alleging damages for lost property taxes, the need to tackle crime, racial segregation and other issues. were rejected.

Rather, Feinerman called the accusations “ripples” that “spill out beyond” Wells Fargo’s alleged misconduct. He then cited a US Supreme Court ruling from May 2017, which involved similar claims by the city of Miami against Wells Fargo and Bank of America. This ruling allowed cities to pursue FHA claims as long as they could establish a “direct” link between the alleged misconduct and the resulting harm.

The Cook County lawsuit began in November 2014, accusing Wells Fargo of pushing minority borrowers into loans they couldn’t afford, which in turn resulted in higher fees, defaults and foreclosures. In addition, the bank rewarded employees with bonuses for offering these loans.

“Although the court allowed the lawsuit, we are encouraged that it has significantly limited the scope of admissible claims,” ​​Wells Fargo spokesman Tom Goyda said Tuesday. “We are ready to defend our balance sheet as a fair and responsible lender. “

In January, the bank’s efforts to dismiss a similar lawsuit filed by the city of Philadelphia cream failed.

Other US cities, including Baltimore, Cleveland and Los Angeles, have also sued major banks in predatory lending cases. Cities argue that discrimination against mortgage lenders has led to more defaults by minority borrowers, lower property tax revenues and increased spending to fight crime.

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