Wells Fargo & Co. has been sued for biased lending by Cook County, Ill. The largest U.S. mortgage lender was accused of targeting black, Hispanic and female borrowers with predatory and discriminatory lending in the Chicago area. The lawsuit is the latest accusing major banks of biased mortgage lending that harmed major American cities, such as Los Angeles, Miami and Baltimore, and prolonged the nation’s housing crisis. These lawsuits have had mixed success.
The lawsuit was filed in the U.S. District Court in Chicago, which is part of Cook County and the third-most populous U.S. city. It’s alleged that Wells Fargo has for more than a decade discriminated against minority and female borrowers in the region, with a goal of maximizing profit. The complaint said the bank targeted borrowers from the time loans were made through foreclosure through “equity stripping,” which includes the imposition of inflated or unnecessary rates and fees, as well as penalties to refinance. Cook County said Wells Fargo’s “deliberate” and “egregious” activities affected at least 26,000 borrowers, eroded the county’s property tax base, and forced the county to spend more to combat blight from abandoned properties.
It’s further alleged that damages may total $300 million or more. The county is seeking a halt to Wells Fargo’s alleged wrongful practices, as well as compensatory and punitive damages. The lawsuit also targets practices at the former Wachovia Corp, which Wells Fargo bought at the end of 2008. Tom Goyda, a Wells Fargo spokesman, said the bank would vigorously defend itself against the county’s “baseless” accusations.
The San Francisco-based lender is also the fourth-largest U.S. bank by assets. Cook County has filed similar lawsuits against Bank of America Corp and Britain’s HSBC Holdings Plc. Los Angeles, the second most populous U.S. city, filed suits against Wells Fargo, Bank of America, JPMorgan Chase & Co and Citigroup Inc. The Fargo case is in the U.S. District Court, Northern District of Illinois.
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