L.A. Sues Wells Fargo and Citigroup, Alleging Predatory Lending

December 5, 2013
Los Angeles Times  
mortgage lending news

The city of Los Angeles has filed twin lawsuits in U.S. District Court against Wells Fargo and Citigroup. It is accusing the banking giants of a “continuous pattern and practice” of lending discrimination that contributed to foreclosures, lower property-tax revenue, and higher costs for municipal services.

The complaints allege that both banks engaged in predatory lending and "redlining" that saddled minority borrowers with unaffordable loans, which led to a disproportionately high number of foreclosures in their neighborhoods compared to white neighborhoods. Los Angeles City Attorney Mike Feuer said the suits send “the firm message that we will use every tool at our disposal to fight for all Los Angeles taxpayers and neighborhoods."

Both banks have issued statements that dismiss the suits as “baseless” and “without merit.” The suits cite reports from two advocacy groups that claimed the mortgage crisis caused more than 200,000 foreclosures in Los Angeles from 2008 through 2012, which then lowered property values and lost the city an estimated $481 million in tax revenue. Los Angeles government costs for safety inspections, police and fire calls, trash removal, and property maintenance of foreclosed houses reached $1.2 billion, according to the California Reinvestment Coalition and the Alliance of Californians for Community Empowerment.

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