(Adds comment from Wells Fargo)
May 28 Wells Fargo & Co lost its bid to
dismiss a lawsuit filed by the city of Los Angeles, which
accuses the bank of predatory lending practices that targeted
minority borrowers and led to the loss of property tax revenue.
U.S. District Judge Otis Wright II ruled on Wednesday that
the city's claims were adequate for the case to proceed.
In the lawsuit, Los Angeles said the bank had engaged in
discriminatory lending practices since at least 2004 by making
loans to minority borrowers that they could not afford,
resulting in a disproportionate rise in the number of
In the complaint filed by the city against Wells Fargo,
former employees of the San Francisco-based bank described how
the predatory loans were specifically marketed to minorities and
minority communities in the city.
The city's lawsuit also said that Wells Fargo denied credit
to certain borrowers based on their race.
Wells Fargo said it was prepared to defend its record as a
responsible lender and its efforts to expand homeownership and
to revitalize distressed neighborhoods in Los Angeles.
"The court's decision to allow the city attorney's lawsuit
to proceed, while disappointing, in no way suggests that the
claims ultimately will prevail," spokesman Gary Kishner said in
The mortgage crisis in Los Angeles resulted in over 200,000
foreclosures and an estimated $78 billion in decreased home
values from 2008-2012, according to a report cited by the city.
Property tax revenue losses during the same period are
estimated to be $481 million, according to the report.
Major banks are fighting multiple legal battles related to
their mortgage lending practices.
The city of Los Angeles filed separate lawsuits against
Wells Fargo and Citigroup Inc last year, alleging that the
banks were guilty of discriminatory lending since at least 2004.
The city had also filed a lawsuit against Bank of America
in U.S. federal court in California in 2013.
The case is City of Los Angeles vs Wells Fargo & Co
13-cv-9007, U.S. District Court, Central District of California
(Reporting by Sudarshan Varadhan; Editing by Lisa Shumaker)