A Los Angeles judge has rejected Wells Fargo's request to dismiss litigation lodged against it by the city of Los Angeles over widespread foreclosures during the housing slump.
The lender is accused of discriminating against minorities, as far back as 2004, by giving them loans that were unaffordable and that ultimately increased the occurrence of foreclosure in their communities. According to the complaint, the practices cost Los Angeles $481 million in lost property tax revenue. The city wants the banks to be held responsible for that loss as well as the cost of increased municipal services triggered by the foreclosures -- a total of 200,000 between 2008 and 2012.
While Wells Fargo sought to have the case thrown out, U.S. District Judge Otis Wright II agreed that the claims of predatory lending were legally sufficient to proceed. "The city's allegations are extremely detailed and specific to defendants' lending practices," Wright wrote in his decision.