Oakland lawsuit accuses Wells Fargo of mortgage discrimination
By Dena Aubin
NEW YORK (Reuters) - The City of Oakland, California has sued Wells Fargo & Co, accusing the largest U.S. mortgage lender of steering minorities into high-cost mortgage loans that allegedly led to foreclosures, abandoned properties and neighborhood blight.
The complaint is a sign that U.S. municipalities are not relenting in a push to hold big banks liable for economic damages following the 2007 foreclosure crisis.
Similar lawsuits accusing banks of mortgage discrimination have been dismissed, though a federal appeals court in Florida recently gave three major cases new life by affirming cities' right to sue under the U.S. Fair Housing Act (FHA).
Filed on Monday in a Northern California federal court, the complaint against Wells seeks punitive damages for alleged FHA violations, accusing the bank of "putting its financial interests ahead of its customers and the City of Oakland in order to maximize profits."
Wells Fargo spokesman Tom Goyda said the accusations "do not reflect how we operate in the communities where we do business." The bank will vigorously defend its record as a fair and responsible lender, he said.
Oakland's lawsuit accuses Wells of targeting minorities for high-cost loans even if they qualified for more affordable loans. The lawsuit said many of the loans ended in foreclosure because Wells refused to refinance them on the same terms it granted to white borrowers.
The lawsuit also accuses Wells of violating the California Fair Employment and Housing Act, which bars discrimination in housing practices on the basis of race.
The lawsuit said Wells steered minorities into various types of "predatory loans," including those with high interest rates, balloon payments and large prepayment penalties. Continued...