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U.S. District Judge Otis Wright II ruled on
Wednesday that the city's claims were adequate for the case to
proceed.
In the lawsuit, Los Angeles said the bank had engaged in
discriminatory lending practices since at least 2004 by making
loans to minority borrowers that they could not afford,
resulting in a disproportionate rise in the number of
foreclosures.
In the complaint filed by the city against Wells Fargo, former
employees of the San Francisco-based bank described how the
predatory loans were specifically marketed to minorities and
minority communities in the city.
The city's lawsuit also said that Wells Fargo denied credit to
certain borrowers based on their race.
Wells Fargo said it was prepared to defend its record as a
responsible lender and its efforts to expand homeownership and
to revitalize distressed neighborhoods in Los Angeles.
"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," spokesman Gary Kishner said in an
email.
The mortgage crisis in Los Angeles resulted in over 200,000
foreclosures and an estimated $78 billion in decreased home
values from 2008-2012, according to a report cited by the city.
Property tax revenue losses during the same period are estimated
to be $481 million, according to the report.
Major banks are fighting multiple legal battles related to their
mortgage lending practices.
The city of Los Angeles filed separate lawsuits against Wells
Fargo and Citigroup Inc last year, alleging that the banks were
guilty of discriminatory lending since at least 2004.
The city had also filed a lawsuit against Bank of America in
U.S. federal court in California in 2013.
The case is City of Los Angeles vs Wells Fargo & Co 13-cv-9007,
U.S. District Court, Central District of California (Los
Angeles).
(Reporting by Sudarshan Varadhan; Editing by Lisa Shumaker)
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