LA sues Citi, Wells Fargo over discriminatory mortgage lending
By Sakthi Prasad
(Reuters) - The city of Los Angeles has filed a lawsuit against Citigroup (C.N: Quote) and Wells Fargo (WFC.N: Quote), seeking damages for a loss in tax revenue due to discriminatory mortgage lending to the city's minority communities, a court filing showed.
In complaints filed in the U.S. Federal Court, LA City attorney Mike Feuer said that Citigroup and Wells Fargo "engaged in a continuous pattern and practice of mortgage discrimination in Los Angeles since at least 2004 by imposing different terms or conditions on a discriminatory and legally prohibited basis."
Spokeswomen for Citigroup and Wells Fargo told Reuters that the lawsuit is without merit.
Major banks are already waging multiple court battles relating to their mortgage lending practices and have so far paid billions of dollars in fines and penalties to various U.S. authorities.
Foreclosures are on the rise in many of United States' most vulnerable neighborhoods, particularly those with substantial concentrations of minority households, the complaint said.
The lawsuit also said that overall, low and moderate-income African-Americans and middle and higher-income Latinos, have experienced the highest foreclosure rates.
According to a report, during 2008-2012, the mortgage crisis in Los Angeles resulted in over 200,000 foreclosures and an estimated $78 billion in decreased home values. Property tax revenue losses during that period are estimated to be $481 million, the filing showed.
"When banks engage in such discriminatory conduct, the misconduct has profound financial consequences for the cities in which mortgaged properties exist, and banks should be responsible for those financial consequences. Banks should reimburse such cities for lost tax revenues due to discriminatory lending," the lawsuit said. Continued...