LA sues Citi, Wells Fargo over discriminatory mortgage lending

Fri Dec 6, 2013 12:35am EST

A man watches police officers make arrests as protesters from political activist group 99 Rise stage a sit-in at the entrance of a CitiBank branch office in Los Angeles, California October 25, 2012. REUTERS/David McNew

A man watches police officers make arrests as protesters from political activist group 99 Rise stage a sit-in at the entrance of a CitiBank branch office in Los Angeles, California October 25, 2012.

Credit: Reuters/David McNew

(Reuters) - The city of Los Angeles has filed a lawsuit against Citigroup (C.N) and Wells Fargo (WFC.N), 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.

Wells Fargo spokeswoman Jennifer Temple said that the bank is deeply disappointed by the City Attorney's decision to file a "meritless" lawsuit.

"The accusations made by the City Attorney are baseless, do not in any way reflect our values as a company, and we will vigorously defend ourselves. We will continue to focus on helping customers succeed financially and expanding homeownership in California and across the United States," Temple said in an emailed statement to Reuters.

Citigroup spokeswoman Liz Fogarty said the bank is disappointed that the LA Attorney does not recognize its deep commitment to fair lending.

"Citi considers each applicant by the same objective criteria, which are blind to race, ethnicity, gender and any other prohibited basis," Fogarty said.

The case is City of Los Angeles vs Wells Fargo, Citigroup, U.S. District Court, Central District of California.

(Reporting by Sakthi Prasad in Bangalore; Editing by Supriya Kurane)

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Comments (1)
CharlesReed wrote:
One only needed to look at Jan 2008 State Level Subprime Loan Characteristics where during 2005-2007 subprime purchase average FICO score was 662 and refinance was 623 for a average of 640.

The Justice Dept did not understand that if Wells Fargo was screwing people in blacks in Baltimore and Memphis that they were screwing people from coast to coast.

Being a former maybe only black Wells Fargo prime/government mortgage loan working in the bank for only a short while, because I saw the steering of customers to bad products.

However this is not what America wants to here that this large bank was committing crimes, but that black were the crooks or simply stupid and with President Obama help with his message that “people wanted to live outside their means” which is code for Negro wallets was not as large as their eyes!

5yrs later from the start of the crisis and LA is just now finding out about this? Where are the black leaders on this and the rest of the country?

Dec 06, 2013 10:33am EST  --  Report as abuse
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