Mortgage

Oakland sues Wells Fargo for mortgage discrimination

Becomes latest city to sue for allegedly steering minorities into high-cost loans

The city of Oakland, California is the latest municipality to sue one of the nation’s largest banks, accusing Wells Fargo (WFC) of allegedly steering minority borrowers into higher-cost loans, which caused rampant foreclosures and neighborhood blight.

According to a Reuters report, Oakland filed suit against Wells Fargo in a Northern California federal court, stating that Wells Fargo violated the Fair Housing Act by “targeting minorities” with high-cost loans, despite their ability to qualify for lower cost loans.

From the Reuters report:

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."

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 said Wells steered minorities into various types of "predatory loans," including those with high interest rates, balloon payments and large prepayment penalties.

In a statement to Reuters, Wells Fargo spokesman Tom Goyda said the accusations "do not reflect how we operate in the communities where we do business,” adding that the bank will “vigorously defend its record as a fair and responsible lender.”

The lawsuit is hardly the first time that Wells Fargo, and other banks, have faced legal challenges from cities.

Earlier this month, a U.S. appeals court revived three lawsuits filed by the City of Miami against Wells Fargo, Bank of America (BAC) and Citigroup (C), alleging predatory mortgage lending practices against minority borrowers.

But in July, Wells Fargo secured a victory in court, when a U.S. District Judge dismissed a lawsuit brought against the lender by Cook County, Illinois, which also accused the bank of predatory lending.

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