|
 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.
[to top of second column] |
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.
The cases are City of Los Angeles v. Wells Fargo & Co et al, U.S.
District Court, Central District of California, No. 13-09007; and
County of Cook, Illinois v. Wells Fargo & Co, U.S. District Court,
Northern District of Illinois, No. 14-09548.
(Reporting by Jonathan Stempel in New York; Editing by Peter
Galloway)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
